Tags: gold | fund | fed | rate hike

Gold Fund Sales Skyrocket on Fed Rate Talk

Gold Fund Sales Skyrocket on Fed Rate Talk

Monday, 09 November 2015 11:11 AM

Gold investors are selling from bullion-backed funds at the fastest pace in three months as prices trade near a five-year low on speculation the Federal Reserve will lift interest rates next month.

Holdings in exchange-traded products fell 26.9 metric tons last week, the most since July. Prices rose on Monday after slumping as much as 1.7 percent on Friday, when a government report showed the pace of U.S. jobs growth accelerated in October. The metal is about 1.5 percent above a five-year low set in July.

There’s a 68 percent probability the U.S. central bank will raise rates at its December meeting, up from 56 percent the day before the jobs report, Fed-fund futures data show. Higher borrowing costs curb bullion’s appeal because it doesn’t pay interest or give returns like other assets such as bonds or equities. Gold is down 7.7 percent this year, set for a third straight annual loss.

“The door is wide open for a first rate hike by the U.S. Federal Reserve in December,” Commerzbank AG analysts said in a report. “ “The U.S. economy appears to be coping well.”

Gold Price

Bullion for immediate delivery added 0.3 percent to $1,092.76 an ounce by 11:12 a.m. in London, according to Bloomberg generic pricing. Prices fell the previous eight days in the longest run since March and touched the lowest since Aug. 7 on Friday.

The 271,000 gain in payrolls was the biggest this year and exceeded all estimates in a Bloomberg survey. Fed Chair Janet Yellen last week said improvements in the U.S. economy meant an increase next month was a “live possibility” if economic data hold up.

Investors sold gold through ETPs for a sixth day, cutting holdings by 3.1 tons to 1,512.8 tons, data compiled by Bloomberg show. Assets are at the lowest since Aug. 19.

“Money has been flowing out of gold,” Xu Wenyu, a Shanghai- based analyst at Huatai Great Wall Futures Co., said by phone. “We may see occasional spurts of buying, but gold remains on a downtrend.”

Silver lost 0.2 percent and platinum dropped 0.9 percent, with both metals falling for an eighth day in the longest run since March. Palladium declined 3.6 percent.


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Gold investors are selling from bullion- backed funds at the fastest pace in three months as prices trade near a five-year low on speculation the Federal Reserve will lift interest rates next month.Holdings in exchange-traded products fell 26.9 metric tons last week, the...
gold, fund, fed, rate hike
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2015-11-09
Monday, 09 November 2015 11:11 AM
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