Gold Declines to 6-Month Low on Economic Improvement

Gold futures slid to a six-month low in the worst losing streak in more than a year as signs of economic improvement curbed demand for a protection of wealth. Silver fell to the lowest since August and platinum dropped.

Gold declined for a fifth session as global equities reached the highest since June 2008. The Federal Reserve will publish minutes of its Jan. 29-30 policy meeting today and Labor Department data on producer prices today and on consumer costs tomorrow will show inflation is in check, economists surveyed by Bloomberg said.

“Bullion’s safe-haven properties as well as its traditional use in inflation hedges are irrelevant at this point,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote in a report. “The market’s attention is set to turn to the Federal Open Market Committee’s January minutes.”

Gold futures for April delivery fell as much as 1 percent to $1,588 an ounce, the lowest since Aug. 2, and were at $1,592.60 by 7:50 a.m. on the Comex in New York. A fifth straight drop would be the longest run since December 2011. U.S. markets were shut Feb. 18 for the Presidents’ Day holiday.

Futures trading volume was 53 percent above the average in the past 100 days for this time of day. Gold for immediate delivery was down 0.7 percent at $1,593.30 in London.

There’s “strong” physical gold-buying interest from China, Australia & New Zealand Banking Group Ltd. said in a report today. China was the second-largest bullion buyer last year, after India, the London-based World Gold Council estimates. Asian markets were closed last week for Lunar New Year holidays.

The Fed said Jan. 30 it would continue to buy $85 billion of Treasuries and mortgage-backed securities a month to support U.S. economic growth. Minutes of the FOMC’s Dec. 11-12 meeting showed members had split between wanting to finish bond purchases in the middle or at the end of the year.

Silver for March delivery fell 1 percent to $29.13 an ounce in New York, after sliding to $28.94, the lowest since Aug. 21. Palladium for delivery the same month was 1.2 percent lower at $755.20 an ounce. Platinum for April delivery slid 2.2 percent to $1,660 an ounce.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell