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Gold falls on economic optimism; dollar hits 4-year highs

Gold fell on Wednesday as the dollar climbed to levels not seen in four years and global shares rebounded, while investors remained cautious ahead of U.S. economic data due later in the week.

Bullion’s safe-haven appeal dropped after data showed sales of new U.S. single-family homes surged in August and hit their highest level in more than six years, offering confirmation that the housing recovery remains on course.

The dollar index against a basket of currencies <.DXY> rose 0.4 percent and touched highs last seen in July 2010.

“A stronger dollar is a fairly consensus view as well as higher U.S. Treasury yields … the Fed rhetoric lately has been helping as well, and for precious metals it means that the outlook remains poor,” Credit Suisse analyst Karim Cherif said.

Spot gold <XAU=>, stronger initially, fell to a session low of $1,215.60 an ounce. It was down 0.5 percent at $1,216.66 an ounce by 2:07 p.m. EDT (1807 GMT), less than $10 above an 8-1/2-month low of $1,208.36 reached in the previous day.

U.S. COMEX gold futures for December delivery <GCcv1> settled down $2.50 at $1,219.50 an ounce, with trading volume in line with its 30-day average, preliminary Reuters data showed.

America’s brightening economic outlook and Europe’s sputtering business environment requiring monetary loosening have helped the dollar index post 10 straight weekly gains.

A stronger U.S. dollar, with room to appreciate further, will continue to weigh on the commodities sector, making gold and silver unattractive investments, said Dominic Schnider, head of commodities at UBS Wealth Management.

The market is likely to monitor U.S. durable goods and GDP data to be released on Thursday and Friday respectively.

Meanwhile, U.S.-led strikes against militants in Syria on Tuesday failed to spur demand for gold.

Investor interest in gold remained weak. SPDR Gold Trust <GLD>, the world’s top gold-backed exchange-traded fund, said its holdings fell 1.2 tonnes to 773.45 tonnes on Tuesday – the lowest since December 2008.

Silver <XAG=> fell 0.7 percent to $17.62 an ounce after slipping to a four-year low of $17.30 on Monday.

Platinum <XPT=> was down 0.9 percent at $1,312 an ounce, and palladium <XPD=> gained 0.1 percent to $812.60 an ounce.

Palladium trimmed some of its earlier gains after Russia’s Norilsk Nickel , the world’s largest nickel and palladium producer, said it was in talks to buy palladium worth up to $2 billion from the country’s central bank.

The market took the news as a sign that state-owned Russian stockpiles are not as depleted as had been thought.




SETTLE CHNG CHNG VOL US Gold DEC 1219.50 -2.50 -0.2 1216.20 1226.70 121,811 US Silver DEC 17.702 -0.077 -0.4 17.510 17.870 48,398 US Plat OCT 1319.40 -13.30 -1.0 1316.50 1341.50 17,414 US Pall DEC 820.05 4.25 0.5 813.60 825.45 5,150 Gold 1216.66 -6.03 -0.5 1215.60 1225.80 Silver 17.620 -0.120 -0.7 17.540 17.870 Platinum 1312.00 -12.40 -0.9 1318.50 1340.00 Palladium 812.60 0.60 0.1 814.80 823.50 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 128,340 130,021 155,274 16.6 0.21 US Silver 52,802 49,166 52,827 23.47 -0.68 US Platinum 25,682 13,268 12,104 13.66 -0.10 US Palladium 5,171 7,552 6,206 21.48 0.11

Source: Reuters

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