Gold trimmed a second week of gains as investors anticipated the Federal Reserve’s next monetary policy meeting amid an extended slide in oil prices.
Bullion for immediate delivery fell as much as 0.8 percent as crude oil extended losses below $60 a barrel in New York, on speculation that OPEC’s biggest members will defend market share against U.S. shale producers. Falling energy costs typically cut demand for gold as a hedge against rising consumer costs. Commodity producers led European stocks to their worst week since 2012.
“The recent strength in gold was driven by some reallocation of profits away from equity markets,” Mark Keenan, Singapore-based head of commodities research at Societe Generale SA, said by phone. “We view the price in a firm downtrend, which is broadly driven by a framework of a recovering U.S. economy and rising rates.”
Gold for immediate delivery fell 0.2 percent to $1,225.36 an ounce by 11:02 a.m. in London. Gold for February delivery was little changed at $1,225.90 an ounce on the Comex in New York. Futures trading volumes were 17 percent below the average for the past 100 days for this time of day, according to data compiled by Bloomberg.
The U.S. central bank will gather Dec. 16-17 as policy makers debate the timing of the first interest-rate increase in eight years. Rising rates cut gold’s allure because bullion generally offers investors returns only through price gains.