Gold Price Falls as Lockhart Comments Add to September Rate Focus

London (Aug 5)  Gold fell after a U.S. Federal Reserve voting member said the bank is close to raising interest rates, boosting the dollar and cutting demand for the metal.

Fed Bank of Atlanta President Dennis Lockhart said in an interview with the Wall Street Journal that it would take a significant deterioration in data for him not to endorse raising rates in September. A gauge of the dollar reached the highest in more than four months.

Bullion is trading near a five-year low as the central bank prepares to raise borrowing costs for the first time since 2006, reducing the metal’s allure because it doesn’t pay interest or give returns like other assets such as equities and bonds. Jobs data from the Labor Department on Friday may give more indication on when the Fed will increase rates.

“People are certainly not going to want to buy after those comments last night,” David Govett, head of precious metals at broker Marex Spectron Group in London, said by phone on Wednesday. “The figures this week are going to be absolutely under scrutiny.”

Gold for December delivery fell 0.5 percent to $1,085.50 an ounce by 10:12 a.m. London time on the Comex in New York. It reached a five-year low of $1,073.70 on July 24. Bullion for immediate delivery lost 0.1 percent to $1,086.94, according to Bloomberg generic pricing.

The main focus for gold is the Fed, said Ric Spooner, a chief analyst at CMC Markets in Sydney. Traders are seeing about even odds on a September rate increase and Friday’s jobs data is forecast to show employers in July added more than 200,000 jobs for a third month.

Investors sold gold from physically-backed funds for a 13th time in 14 days. They cut holdings by 3.3 metric tons to 1,520.2 tons, the lowest since 2009, data compiled by Bloomberg show.

Silver futures for September delivery declined 0.5 percent to $14.49 an ounce in New York. Platinum for October slipped 0.7 percent to $952.20 an ounce, trading near a six-year low. Palladium for September lost 0.8 percent to $594 an ounce after reaching the lowest since 2012 on Tuesday.

Source: Bloomberg