Gold depreciates to four-week low on US Fed speculation

Prices could remain under pressure from weak technicals and outflows from exchange-traded funds (ETFs) that have hit precious metals across the board.

Miners reflected the sombre mood among precious metal investors with heavy falls across leading shares in London. Spot gold was down 0.2 percent at $1,130.66 an ounce at 1030 GMT, having earlier touched its lowest since October 5 at $1,130.20. But the United States central bank’s hawkish tone last week triggered a fresh sell-off in bullion. “The combination of a stronger dollar, soaring US equity markets, ETF liquidation, a jittery Fed, along with a worsening technical picture will all combine to keep the complex on the defensive for a little while longer”, said INTL FCStone analyst Edward Meir.

“The uniquely diverse nature of the gold market, with demand spread across many countries and different sectors, means there will be divergent reactions to price movements from different parts of the market”, a spokeswoman from the council said.

The extended demand from China would also be likely due to the devaluation of the home currency in August.

Investors were seen reducing their gold exposure. Other data showed construction spending rose in September to its highest in 7-1/2 years, indicating that the economy remained on firmer ground despite signs of consumer spending cooling.

Any economic US data could be interpreted in various ways, so investors are unlikely to see clear-cut signals on near-term rate decisions, Turner said. It fell almost two per cent last week, its worst weekly performance in nine weeks.

Holdings in exchange-traded products backed by gold shrank 3.4 metric tons to 1,536.26 tons on Monday, the lowest since October 13.

Gold prices “came under a few pressure after renewed concerns around Fed rate hike”, Australia and New Zealand Banking Group Ltd said in a note yesterday. “With yields being universally low, investors are continuing to find better value in stocks rather than gold or silver, which pay no interest or dividends and cost money to store”, said Fawad Razaqzada, technical analyst for Forex.com. The yellow metal is now hovering just above key psychological support at $1,100.00 heading into Friday morning’s important U.S.jobs report.