Gold falls on economic optimism; dollar hits 4-year highs
New York (Sept 24) 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 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, 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
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
, 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 fell 0.7 percent to $17.62 an ounce after
slipping to a four-year low of $17.30 on Monday.
Platinum was down 0.9 percent at $1,312 an ounce, and
palladium 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.