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Gold futures fell to the lowest since January as the outlook for higher U.S. interest rates helped strengthen the dollar, curbing demand for the metal as an alternative investment. Silver dropped to a four-year low.

The greenback climbed to the highest since 2010 against a basket of 10 currencies amid signs of improving U.S. economic growth and after the Federal Reserve raised the median estimate for its benchmark interest rate. Gold has retreated 5.6 percent in September, heading for the biggest decline since June 2013.

Bullion, which rallied in the first half of the year amid escalating tensions in Ukraine and the Middle East, is heading for its first quarterly decline in 2014. Demand for precious metals as a protection of wealth has been diminished by the surge in the dollar, expanding U.S. growth and equities near record highs.

“The strengthening dollar has been attracting global investors at the expense of gold, whose safe haven status is no longer needed,” Bernard Dahdah, an analyst at Natixis SA in London, said by e-mail.

Gold futures for December delivery slid 0.6 percent to $1,211.70 an ounce on the Comex in New York at 11:26 a.m. after touching $1,204.30, the lowest since Jan. 2.

Trading was 35 percent above the average for the past 100 days for this time, data compiled by Bloomberg show.

Gold pared losses after two officials said Russia’s central bank is weighing the introduction of temporary capital controls should money outflows from the country deepen.

via Mainichi

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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