Gold fell to the lowest since January on speculation that the Federal Reserve will raise U.S. interest rates sooner than forecast, crimping demand for a hedge against inflation. Silver slumped to a 14-month low.
More than $5.1 billion has wiped from the value of exchange-traded products backed by bullion since June 30. Money mangers cut their bullish wagers on the metal for three straight weeks, while open interest in New York futures and options is near the lowest in five years.
Gold has dropped 11 percent from this year’s high as the U.S. economy gained traction and the dollar strengthened, cutting demand for bullion as an alternative asset. Demand for a haven declined after tensions in Ukraine and the Middle East eased. Global holdings in ETPs backed by the metal fell in four of the past five months.
“It’s hard to get excited about gold in this current environment when the dollar is rising and the political tensions have eased,” Scott Gardner, who helps manage $450 million at Verdmont Capital SA in Panama City, said in a telephone interview. “People don’t want gold when rates are expected to rise, while inflation has remained muted.”
Gold futures for December delivery fell 0.7 percent to $1,237.10 an ounce at 11:44 a.m. on the Comex in New York, after touching $1,235.30, the lowest for a most-active contract since Jan. 23.
On March 17, gold reached $1,392.60, the highest since Sept. 9, 2013.