Gold prices rose on Tuesday, as some traders sought a haven from flaring tensions in the Middle East, but gains were muted by anticipation of higher interest rates in the U.S. More than $6.5 billion was wiped from the value of gold ETPs since mid-October.
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Gold for December delivery on the Comex division of the NY Mercantile Exchange was last up $7.30 or 0.68 percent at $1,073.90 per ounce.
(Kitco News) – Gold prices ended a quieter US day session modestly lower, pressured by bearish outside markets on this day that saw the USA dollar index higher and hit a seven-month high. The incident prompted some investors back into gold though the prospect of a US rate increase next month continues to weigh on trading sentiment. That compares with a net-bullish position of 21,530 contracts a week earlier.
Bullion, long considered a haven during times of geopolitical turmoil, failed to sustain brief gains last week following the November 13 terrorist attacks in Paris that left 129 people dead and injured another 352.
Buying out of top consumer China has been good but has been unable to support prices, the trader said. That’s down from the average 875 tons in the past five years. So says the prominent investment bank Goldman Sachs. “They just see it as an ongoing risk, but a single event is not enough to derail an economy or a market, so investors have chosen to ignore it”.
This report was in line with expectations, yet since it did not show any unexpected weakness it may contribute to the Fed’s willingness to increase rates at the December FOMC meeting.
China’s net gold imports from main conduit Hong Kong fell in October from a 10-month high reached in the previous month, data showed yesterday.
The slump hasn’t deterred billionaire hedge fund manager John Paulson. “Lack of signs of production cutbacks, not least from non-Opec producers, will help create a very nervous environment ahead of the first quarter of 2016”.
There has not been an increase in the Fed’s interest rate since June 2006, before the beginning of the American financial crisis. So what is an alternative scenario which might start to see gold pull out of its 4 year decline from its peak in September 2011?
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It also came as the US Federal Reserve is preparing to raise interest rates at its Federal Open Market Committee (FOMC) meeting scheduled to be held in December.
