Oil Falls as Saudi Arabia Mulling Price Discount

Gold traded near a four-year low on speculation the dollar will keep strengthening as the Federal Reserve considers raising interest rates, while other central banks add stimulus.

While the Fed ended its bond-buying program last month and is now weighing the timing of interest-rate increases, the Bank of Japan on Oct. 31 raised its annual target for enlarging the monetary base to 80 trillion yen ($710 billion) a year, up from a previous 60 trillion yen to 70 trillion yen. The Bloomberg Dollar Spot Index was set for the highest close since June 2010.

Gold capped the first back-to-back monthly decline of 2014 last week after dropping to $1,160.50 an ounce, the lowest price since July 2010. Rising rates reduce gold’s allure because the metal generally offers investors returns only through price gains, while a stronger dollar typically cuts demand for a store of value. Societe Generale SA and Goldman Sachs Group Inc. are among banks expecting further losses for gold. A technical gauge indicated prices may have dropped to fast.

“The prospect of firmer rates, coupled with our expectation for a stronger dollar, present significant headwinds for gold and are likely to skew risks to the downside,” Barclays Plc analysts including New York-based Suki Cooper said in a report today. “In the near term, physical buying is likely to offer some support on the downside.”

Gold for December delivery slipped 0.1 percent to $1,170.60 an ounce by 7:55 a.m. on the Comex in New York. Prices declined as much as 0.9 percent to $1,161 earlier today, before rebounding. Bullion for immediate delivery retreated 0.2 percent to $1,170.99 in London, according to Bloomberg generic pricing.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza