Gold fell to a five-month low in New York, as extended gains in the dollar heightened speculation of slowing demand for precious metals.
The dollar climbed 0.4 per cent against the euro after jumping one per cent yesterday. Holdings in bullion-backed exchange-traded products fell about 1.5 per cent from a record on December 14, data compiled by Bloomberg show. Gold is still up 7.8 per cent this year, heading for an 11th consecutive advance.
“Yesterday and overnight the gold price traded lower as a reaction to the stronger US dollar,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. “The fundamental investment case for gold is still intact.”
Gold futures for February delivery declined two per cent to $1,532.20 an ounce at 8.11 am on the Comex in New York, and earlier today dropped to $1,523.90, the lowest level since July 7. The metal for immediate delivery fell as much as 2.1 per cent to $1,522.65 an ounce, the lowest since July 6.
The futures climbed to a record $1,923.70 an ounce on September 6 as investors and central banks and other so-called official institutions boosted holdings to protect their wealth. ETP holdings rose 0.3 percent yesterday, the first increase in two weeks.
“You have stagnating output and on the demand side jewelry consumption adapts to higher prices,” Dincer said.