Gold Set To End Month At Lowest In More Than 5 Years

The dollar fell 1.1 percent against a basket of currencies after the data on employment costs.

U.S. gold for December was down 8 dollars at $1180 an ounce on the New York Mercantile Exchange.

” Class=”local_link” target=”_blank”>gold headed for its worst monthly drop in two years on Thursday, nearing the end of July nearly 7% down against the Dollar after weaker than expected US GDP data followed the Federal Reserve’s latest hint that the central bank is preparing to raise interest rates from 0% in September”. The metal has lost 6.4 per cent so far this month, its steepest decline since June 2013.

Spot gold was up 0.1 per cent at $1,088.86 an ounce by 0037 GMT, but not far above last week’s trough of $1,077, its lowest since February 2010.

“Gold is an asset that pays no interest or coupon and the rate hike is certainly putting pressure on prices“, ING Bank senior strategist Hamza Khan said.

The Federal Reserve appears closer to raising rates for the first time in almost a decade as gains in employment, real estate and manufacturing signal that the economy no longer requires the emergency measures enacted in the wake of the 2008 credit crisis.

The most active gold contract for December delivery rose $6.4 (0.59 percent), to settle at $1,095.10 per ounce, Xinhua reported. Higher interest rates would increase the opportunity cost of holding non-yielding bullion. The Fed meets next that month after concluding this week that the world’s largest economy is “expanding moderately”. The next important data release is US non-farm payroll figures, due on August. 7. Prices fell as the dollar strengthened on prospects for rate rises and amid weaker demand for physical gold, Lai said. “If we get a very strong labour market report next week then this gold strength is going to be reversed”, Briesemann said. “Physical demand has been on the low side with premiums in China and India hardly moving”, MKS Group trader Jason Cerisola said in a note.

On the Shanghai Gold Exchange (SGE), premiums stood at just over $1 an ounce on the London spot price, traders said.

Elsewhere in metals trading, silver futures for September delivery tumbled 1.06% to $14.545 a troy ounce while copper futures for September delivery dropped 0.45% to $2.366 a pound.