Fed officials lined up behind a likely December interest rate hike on Thursday with one key central banker saying the risk of waiting too long was now roughly in balance with the risk of moving too soon to normalize rates after seven years near zero.
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Platinum fell to $870 per troy ounce, its lowest since December 2008, The price differential between these both precious metals rose over $200 per troy ounce as platinmu underpormed against gold recently.
Meanwhile, December silver was four cents, or 0.3%, lower at $14.19 U.S.an ounce, and on track for a weekly decline of 3.4%.
Rising rates weigh on gold, as they lift the opportunity cost of holding non-yielding assets, while boosting the dollar.
“Gold will probably continue to just weaken marginally, we don’t think there’s much more to go because the market’s now factoring in a December interest rate hike”, David Lennox, an analyst at Fat Prophets, said by phone from Sydney.
Assets of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to 661.94 tonnes on Thursday, the lowest since September 2008.
Holdings of the top eight gold funds are at their lowest since March 2010.
“Our above-consensus Fed call should push gold prices towards $1,000 per ounce this year and $900 per ounce in 2016 mainly because of investor position liquidation”, said ABN Amro in a note.
“While we find physical demand for the PGMs from industrial sources to be broadly steady, investors are retreating and we see no early signs of further production restraint”. The metal was down 0.9 percent at $1,075.85 an ounce by 1423 GMT. Palladium fell 2 percent to its lowest since August at $556.70 an ounce and platinum extended losses to $868.75, a near seven-year low. Prices of the autocatalyst metal are down more than 12% this week, its biggest weekly decline since late 2011. Spot palladium was changing hands at $US547.24 an ounce, down 2 per cent, near a three-month low.
Higher rates would dent demand for non-interest-paying gold while boosting the dollar.
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“Gold will be targeting $1090 and $1095 on the top-side”, says the Asian trading desk at Swiss bullion refining and finance group MKS, “as the metal looks for a few respite following the recent weakness”.
