The bank analysts put the likely continuing decline down to the commencement of Fed interest rate rises (widely anticipated to begin next month) and the continuing lack of price inflation against which gold is seen as an important hedge. US gold futures also fell 1.3 percent to $1,055.90 an ounce and were also headed for a sixth consecutive weekly decline. The omens are not positive for gold in the lead-up to the December rate meeting, Societe Generale analyst Robin Bhar said.
Prices are trapped in their worst rout since July as Federal Reserve officials talk up improvements for the USA economy and reinforce signs that they’re ready to raise borrowing costs for the first time since 2006.
Higher rates would dent the appeal of non-interest-paying bullion, while boosting demand for the dollar.
Dollar-denominated commodities such as gold become less expensive for foreign purchasers when the dollar depreciates. Long-term bearish trend has not changed while gold prices remain in between a 6-year low and a crowded support area in 1085-1098. Read more…