New York - Gold futures fell to a two-week low as US manufacturing in October increased at a faster pace than forecast, boosting the dollar and increasing the prospects for the Federal Reserve to taper monetary stimulus.
The Institute for Supply Management’s factory index rose to the highest since April 2011, according to a report today.
The gauge climbed to 56.4 from 56.2 in September.
The median forecast in a Bloomberg survey of economists was 55.
Readings above 50 indicate growth.
The greenback headed for the biggest weekly gain since June against a basket of 10 currencies, eroding the appeal of gold as alternative investment.
“People are now really getting worried about tapering,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview.
“The ISM number today is a big nail in the coffin.”
Gold futures for December delivery declined 1.2 percent to $1,307.30 an ounce at 11:02 a.m. on the Comex in New York.
Earlier, the price touched $1,305.60, the lowest for a most- active contract since October 17.
Through yesterday, gold tumbled 21 percent this year, heading for the first annual decline since 2000.
Some investors lost faith in the metal as a store a value amid a US equity rally to a record and tame inflation.
Platinum futures for January delivery advanced 0.1 percent to $1,447.60 an ounce on the New York Mercantile Exchange.
Earlier, the price climbed as much as 0.7 percent.
The metal advanced 2.5 percent last month.
Lonmin Plc, Impala Platinum Holdings Ltd. and Anglo American Platinum Ltd., the world’s top producers, are at risk of simultaneous strikes as unions fail to wage accords.
Silver futures for delivery in December fell 0.2 percent to $21.82 an ounce on the Comex.
Earlier, the price touched $21.705, the lowest since October 17.
Yesterday, gold had the biggest loss in almost three weeks and silver tumbled 4.9 percent, the most since September 20, after the Fed said that the US economy shows signs of “underlying strength.” - Bloomberg News