Gold Drops to 8 Month Low

Gold fell to an eight-month low in New York as signs of an improving U.S. economy strengthened the dollar and curbed demand for a protection of wealth. Platinum sank to an almost 15-month low and palladium declined.

The dollar climbed to a four-year high against 10 major currencies after data showed yesterday sales of new U.S. homes surged in August and before a report tomorrow that analysts said will show economic growth quickened.

Bullion is headed for the first quarterly loss in three and Goldman Sachs Group Inc. repeated a forecast for gold to decline this year. Federal Reserve officials raised interest-rate forecasts last week, even as they maintained a pledge to keep rates low for a considerable time to aid the recovery.

“It’s all on the back of the stronger dollar” and improving U.S. economy, Bernard Sin, the head of currency and metal trading at MKS (Switzerland) SA, a Geneva-based refiner, said today by phone. Still, lower prices have attracted more physical purchases and demand may increase ahead of the Golden Week holiday next week in China, the largest buyer, he said.

Gold for December delivery fell 0.7 percent to $1,210.70 an ounce on the Comex in New York by 7:31 a.m. It reached $1,206.60, the lowest since Jan. 2, and is up 0.7 percent this year. Gold for immediate delivery declined 0.6 percent to $1,210.29 in London, according to Bloomberg generic pricing.

Futures trading volume was 28 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg show.

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