Gold price falls after early surge
London (Oct 24) Gold fell on Friday after the dollar soared to its highest in more than two months and China eased monetary policy for the sixth time in a year, reviving expectations for a US rate rise. Spot gold slid 0.3 percent to $1,162.35 an ounce by 1457 GMT. The metal had earlier rallied to a session-high of $1,179.40, in tandem with global markets after China cut interest rates.
But gains were brief, as China's move fuelled expectations that the United States may tighten monetary policy this year.
"The China cut removes some of the pressure on major central banks to deliver further easing or postpone rate hikes," said Jens Pedersen, analyst at Danske Bank. "For the Fed next week, the Chinese headache will be slightly less."
Gold had fallen to 5-1/2 year lows in recent months on expectations the Fed will raise rates this year, potentially lifting the opportunity cost of holding non-yielding bullion.
Concerns over the health of the global economy have recently pushed back expectations into 2016. But further stimulus in China and upbeat US data have increased the likelihood of a December rate rise.
Gold was further pressured by the dollar, which rose to its highest since Aug. 19 against a basket of currencies. Better-than-expected manufacturing figures for October supported the currency. US flash manufacturing PMI rose to its highest since March, beating expectations for a slight decline from the previous month.
A stronger dollar weighs on gold by making the metal more expensive for holders of other currencies.
Friday's slide deepened losses from the previous session, when gold fell to its weakest since Oct. 13. The metal was on course to lose 1.2 percent this week, snapping a two weeks of gains.
Gold is expected to keep edging down into next year. Goldman Sachs estimates prices at $1,100 in three months, $1,050 in six months and $1,000 in 12 months.
"The long-term outlook is still framed by ongoing, although slow, global recovery," said Norbert Ruecker, head of commodity research at Julius Baer.
Technicals pressured further, as gold slipped from the 200-day moving average of about $1,174, after briefly breaking through it earlier in the day.
The metal recently broke through the resistance level for the first time since May, holding near it for six sessions.
Silver was down 0.1 percent at $15.80 an ounce, platinum dipped 0.5 percent to $1,000.50 and palladium gained 1.4 percent to $692.22.