Gold down to lowest since 2010

The probability of the Fed increasing interest rates for the first time since 2006 rose to 74 percent Friday from 72 percent yesterday, Fed-fund futures data show. The ICE Dollar Index, which tracks the buck against a basket of worldwide currencies, hit an eight-month high of hit an eight-month high of 100.20 and recently traded up 0.3% at 100.05.

Falling through last week’s low at $1065 to hit $1053 per ounce, Dollar gold prices have now lost more than 45% from the all-time record of September 2011, hitting the lowest level since January 2010.

“We still can not get too excited about the precious metals group here, as we don’t see any bullish variables coming to the fore other than a possible short-covering rally brought on by the fact that we are quite oversold, with gold’s RSI reading in the mid-20′s”, INTL FCStone’s Edward Meir said. Spot gold was down 0.1 percent at $1,074.76 an ounce by 1247 GMT US gold was unchanged on the day after a near 1 percent gain in the previous session.

Premiums on the Shanghai Gold Exchange, a proxy for demand in China, were trading at $5-$6 an ounce, versus $3-$4 at the beginning of the month.

Liquidity was thin, with US markets are shut for the Thanksgiving holiday.

Demand for bullion and the other metals that do not pay any interest could be hurt by higher rates.

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

Fed funds futures, used by investors and traders to bet on central bank policy decisions, forecast a 78% likelihood the Fed would raise rates at its December meeting, up from 52% a month ago. Analysts note that gold is near its six-year low point.

‘The Turkey-Russia tension has only had a limited impact and now gold is back on its downward trend mainly due to the dollar and rate hike expectations, ‘ Commerzbank analyst Daniel Briesemann said.

A couple of years ago all net gold export from the United Kingdom (a large supplier of gold to the East) to China flowed via Switzerland or Hong Kong. Palladium dropped 1.5 percent to $547.25.

Elsewhere in metals trading, silver futures for December delivery dropped 0.44% to $14.095 a troy ounce, while copper futures for March delivery slid 0.30% to $2.084 a pound.