Gold fell for a fifth straight session, the longest slump since June, as a rising dollar eroded demand for the metal as an alternative asset.
The Bloomberg Dollar Spot Index rose 0.7 percent, heading for the biggest gain in more than two weeks. Currencies of natural-resource-exporting nations fell as commodities prices dropped and investors’ appetite for riskier assets waned. Bullion futures erased an earlier gain as the greenback advanced.
Gold prices ended the U.S. day session near steady levels Tuesday. Some safe-haven demand was countered by bearish “outside markets” that saw lower crude oil prices and a higher U.S. dollar index. December Comex gold was last up $0.20 an ounce at $1,325.70. December Comex silver was last down $0.03 at $18.965 an ounce.
Crude oil prices were under selling pressure Tuesday after the International Energy Agency, in its monthly report, lowered its forecast for world oil demand this year. This report follows an OPEC report on Monday that said non-OPEC oil supplies will rise in 2017. Meantime, the other key outside market saw the U.S. dollar index trading higher on the day. Precious metals are mostly priced in U.S. dollars. When the greenback appreciates against the other world currencies, it makes the metals more expensive in non-U.S. currency.
Goldman Sachs has lowered the odds for a U.S. Fed rate hike next week to 25 percent from 40 percent.
However, the bank did raise the odds that the next increase will come at the December meeting to 40 percent from 30 percent previously, Goldman Sachs Jan Hatzius said in a note.
Goldman Sachs new forecast comes following dovish comments from Fed Governor Lael Brainard, who cautioned about moving too quickly.
"The lack of a signal is meaningful because if action were likely, the committee would normally make an effort to nudge the market toward anticipating a hike," Goldman Sachs said in the note.
“You have rising expectations that there is the possibility of a rate increase this year,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “A December rate hike is a distinct possibility that’s hurting the gold market.”
Reference: KITCO, Bloomberg
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