Gold close to lowest in almost six years on stronger dollar

Spot gold hit $1,052.46 U.S.an ounce, its lowest since February 2010, and was last down 1.2% at $1,058.30 U.S.

Tensions have lessened between Turkey and Russian Federation overnight which has eased the safe-haven bid for gold.

“The declining value of the Australian dollar has once again been the great saviour of our gold sector and of the local resources industry in general”, Surbiton director Sandra Close said.

Data on Wednesday showed U.S. manufacturing output rose well above economists’ expectations in October, while business spending plans surged.

Gold has fallen from a peak of about $1,177 an ounce late in October, or by about 10%, since the Federal Reserve started seriously signaling its intention to raise rates in December.

Platinum futures for January delivery on the Nymex were down $3.40 at $844.00 per ounce, while the most-actively traded palladium contract was $543.50 per ounce, up $2.15.

The probability of the Federal Reserve increasing interest rates for the first time since 2006 rose to 74% on Friday from 72% yesterday, Bloomberg reports.

A stronger greenback makes dollar-denominated gold expensive for holders of other currencies. However, if you’re passionate about investing and the financial markets, it’s impossible to ignore the goings-on in other asset markets, even those that have minimal relevance to the individual investor, like gold.

Raising rates “increases the opportunity cost of holding gold”, said Bernard Dahdah, a precious-metals analyst at Natixis SA in London.

Investor sentiment was weak with precious metals funds posting their biggest net outflow last week in around four months, according to Bank of America Merrill Lynch.

Reuters reported that gold prices have continued to fall to near six year lows on a stronger U.S. dollar.

Gold for December delivery on Comex fell $3.80, or 0.4%, to settle at $1.070 an ounce. Whether this will change as the new planned Shanghai Gold Fix is implemented and the very physical Chinese market plays an ever larger role, still remains to be seen.

Gold prices pulled lower Friday as the dollar rallied to an eight-month high, though trading was tepid as many traders in the US remained on the sidelines in the wake of the Thanksgiving holiday. Silver eased to US$14.31 an ounce while platinum fell US$5 to US$835 an ounce.

“There’s a total vacuum of buying in this market”, said Bill O’Neill, co-founder of commodities investment company Logic Advisors”.