Gold and Silver settled lower in futures market on Friday and was heading for a sixth straight weekly decline under pressure from a firm dollar and prospects of a U.S. interest rate rise next month.
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“If US$1,066 does break, our target is US$1,045, which is the 2010 low”.
In the Indian physical gold market, a Mumbai-based dealer said market behavior was geared towards the increasing likelihood of a rate hike, saying buyers were holding off activity until prices dropped to around $1,000/oz. Investors are awaiting non-farm payroll data in the US later this week which could provide an impetus to expectations of a USA rate increase.
Premiums on the Shanghai Gold Exchange, an indicator of buying strength at top consumer China, were at a healthy $5-$6 an ounce.
Despite the downbeat data, policymakers are likely to reinforce the diverging outlooks for U.S. and eurozone monetary policy this week, with USA jobs data expected to clear the path for the first rate rise in the world’s biggest economy since 2006.
Bullion for immediate delivery climbed as much as 0.9% to $1 074.76 an ounce and was at $1 072.20 at 12:39pm in Singapore, according to Bloomberg generic pricing. Gold futures are down 11% in the year through Friday.
Despite market participants hearing that traders were waiting for lower dollar prices, the consensus was that demand still remained robust in the aftermath of Diwali, particularly in comparison to October’s weak demand.
Precious metals funds posted their biggest net outflow last week in around four months, said Bank of America Merrill Lynch.
Gold miners in Australia, emboldened by a weakening currency, have been increasing production in the face of a global rout in the precious metal, figures released on Sunday showed.
“The omens are not positive for gold in the lead-up to the December rate meeting”, Societe Generale analyst Robin Bhar said. During its November swoon gold closed in the green in only eight sessions, losing roughly 8% in value for the month.
December silver also gained 7.2 cents, or 0.5%, to $14.08 an ounce, while March silver the more active contract, rose 3.7 cents, or 0.3%, to $14.085 an ounce.
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Palladium has lost 19 per cent for the month.
