Melbourne - Gold held a weekly loss as investors weighed the outlook for higher interest rates in the world’s largest economy before the Federal Reserve meets this week.
Bullion for immediate delivery lost as much as 0.4 percent to $1,153.69 an ounce, before trading little changed at $1,159.57 by 11.18am in Singapore, according to Bloomberg generic pricing. The metal completed a second weekly drop on Friday after slumping to $1,147.72 on March 11, the lowest level since December 1.
The dollar surged to the highest in a decade last week and hedge funds exited gold at the fastest pace in more than four months on mounting speculation the Fed is getting closer to raising the rates for the first time since 2006. Policy-makers meet this week, and key to their debate will be whether the economy has gained enough steam to warrant removing a pledge to be “patient” on raising borrowing costs in a statement scheduled for March 18.
“We, and it appears the consensus, expect the Fed to alter its forward guidance by dropping its ‘patience’ reference,” analysts from Australia & New Zealand Banking Group Ltd wrote in a note. “We expect this to be replaced by perhaps some more state-contingent language, providing the Fed with the flexibility to begin raising rates from around mid-year.”
Gains in the labour market are increasing the chances the Fed will raise rates, eroding the haven appeal of gold. A Labour Department report on March 6 showed employers added 295 000 jobs last month, exceeding expectations, while the unemployment rate fell to an almost seven-year low of 5.5 percent. The Bloomberg Dollar Spot Index rose for a fourth straight week in the period ended March 13 and was 0.2 percent lower on Monday.
Gold for April delivery advanced 0.5 percent to $1,157.70 on the Comex. Money managers cut their net-long wagers for a sixth week, US government data show. Holdings in exchange-traded products backed by gold declined for a 12th day on March 12, according to data compiled by Bloomberg.
Silver for immediate delivery retreated 0.2 percent to $15.6318 an ounce. Spot palladium dropped as much as 1.1 percent to $784.75 an ounce, the lowest since February 24, and was at $790.90. Platinum lost as much as 0.6 percent to $1,111.50 an ounce, the lowest since 2009, before trading at $1,118.75.
Bloomberg