Gold investors are selling from bullion-backed funds at the fastest pace in three months as speculation that the Federal Reserve will lift US interest rates next month cut demand for the metal as a store of value.
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December gold tacked on 40 cents to settle at $1,088.10 an ounce on Comex.
Gold ticked up after an eight-day losing streak on Monday, but languished near its lowest in three months as surging USA nonfarm payrolls boosted expectations of a December rate hike in the United States. It earlier fell to $14.31, a level not seen since September 15.
A forecast-beating U.S. October employment report on Friday pushed up bets the Fed will increase rates for the first time in nearly a decade, sending non-interest paying gold to $1,084.90 an ounce, the lowest level since August.
The dollar hovered just below a seven-month peak against a basket of major currencies, having consolidated its payrolls-inspired rally in a subdued session overnight.
The USA currency has strengthened against the euro after four governing council members said a consensus was forming at the European Central Bank to take one of its benchmark interest rates deeper into negative territory in December.
There’s a 68 percent probability the USA central bank will raise rates at its December meeting, up from 56 percent the day before the jobs report, Fed-fund futures data show.
A series of key U.S. macroeconomic data, which may provide additional clues over the possibility of a hike, is to be released on Friday.
“We really have to concentrate on whether growth is sound in the USA (but) we are not going to have an inflation problem, so from that perspective there is no investment case to be done for gold”, he added.
Elsewhere in metals trading, copper slumped to a five-week low on Monday, after latest trade figures out of China added to concerns over the health of the world’s second-biggest economy. Palladium declined 3.6 percent. The stash was 1,708.5 tons a month earlier.
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.
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Bullion for immediate delivery climbed 0.4 per cent to US$1,093.67 an ounce at 11:27 aM in Singapore, according to Bloomberg generic pricing.
