Gold rose for the first time in six days in New York on speculation that a decline to an eight-month low will spur more purchases.
Bullion capped a 2.8 percent drop last week as the dollar strengthened and data showed that U.S. retail sales rose in August by the most in four months. The metal’s 14-day relative-strength index dropped below the level of 30 last week, signaling to some traders that prices may be poised to rebound.
Gold is heading for the first quarterly loss this year as the Bloomberg Dollar Spot Index climbed 4.8 percent since the end of June, reaching a 14-month high today. The metal has fallen as signs of an improving U.S. economy added to the case for the Federal Reserve, which begins a two-day policy meeting tomorrow, to move closer to raising interest rates.
There’s “some short covering and bargain hunting seen down at the lows,” David Govett, head of precious metals at Marex Spectron Group in London, said in a note today, referring to closing out bearish bets. Still, there’s less need to hold gold “whilst the U.S. economy continues to push strongly ahead, buoying the U.S. currency” and increasing prospects of higher borrowing costs, he said.
Gold for December delivery rose 0.4 percent to $1,236 an ounce by 7:35 a.m. on the Comex in New York. It fell to $1,226.30 earlier today, the lowest since Jan. 9. Gold for immediate delivery gained 0.5 percent to $1,235.78 an ounce in London, according to Bloomberg generic pricing.
Futures trading volume was 18 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.
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