Gold price in longest stretch of declines since May as Fed bets climb
Singapore (Aug 29) Gold dropped for a seventh day, heading for the longest run of declines since May, and silver fell to a two-month low as comments from leading central bankers boosted speculation that US interest rates may rise as soon as next month, buoying the dollar.
Bullion for immediate delivery lost as much as 0.5 per cent to $1,314.99 (Dh4,826) an ounce, the lowest since July 26, and traded at $1,317.87 at 2:50 pm in Singapore, according to Bloomberg generic pricing. Silver slumped to the lowest level since June 30.
Gold’s rally this year has been pegged back as a September rate hike is now on the cards after Federal Reserve Chair Janet Yellen said on Friday that the case for tightening had strengthened, while her deputy, Stanley Fischer, said an increase at the September 20-21 meeting was possible. On Saturday, Bank of Japan Governor Haruhiko Kuroda reiterated a pledge to ease policy further if necessary, potentially hurting the yen.
“Fischer clarified that Yellen’s comments were consistent with a potential rate hike in September, and possibly more than one for the year,” Bryan Lum, a Singapore-based strategist with Phillip Futures Pte, said in an e-mail. “Markets took this as a signal to reposition themselves with a more hawkish outlook, which consequently saw gold turn more bearish. “
The focus this week will be on Friday’s US non-farm payroll numbers, and should the reading again be strong, a further selloff of gold can be expected, Lum said. Fed funds futures as of Friday indicated a 42 per cent chance that the Fed will hike as early as next month, up from 22 per cent a week earlier. Higher rates tend to hurt bullion while boosting the US currency, which rose as much as 0.2 per cent on Monday.