United States gold futures for December delivery settled up 0.7 per cent at $US1,073.80.
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Gold prices have dropped, hovering just above the lowest level in almost six years after the USA dollar rose on the back of strong American economic data. Take Peter Schiff, for example, a prominent gold bug who never met a piece of disconfirming evidence he wasn’t able to ignore.
“We are keeping an eye on the dollar as a possible catalyst (for gold)”, ScotiaMocatta analysts said in a note.
Data on Wednesday showed USA manufacturing output rose well above economists’ expectations in October, while business spending plans surged.
Until the Federal Reserve meeting in December, which many investors now expect to bring a long-delayed increase in interest rates, the gold market will be “twiddling [its] thumbs”, Govett said.
Gold is primarily sold worldwide using US dollars, making the currency’s strengthening value a key factor in the commodity’s performance on the market. However, if you’re passionate about investing and the financial markets, it’s impossible to ignore the goings-on in other asset markets, even those that have minimal relevance to the individual investor, like gold.
Higher rates would dent the appeal of non-interest-paying bullion, while boosting demand for the dollar. “In addition, news of lower gold imports into China may have also weighed on the precious metal”.
The fundamental picture is also bearish – Indian gold demand could fall to an eight-year low of 150-175 tonnes in the fourth quarter, the All India Gems & Jewellery Trade Federation estimated.
Investors in precious-metals backed trust funds last week pulled out money at the fastest pace in 4 months, analysis from Bank of America Merrill Lynch says.
Among other precious metals, silver, platinum and palladium were all heading for weekly declines. March Comex silver was last down $0.068 at $14.12 an ounce.
Elsewhere in markets, the U.S. dollar index was slightly firmer, and the major indexes were little changed in early trading.
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The greenback remained broadly supported after a string of upbeat US data released over the week added to expectations that the Federal Reserve will raise interest rates next month.
