Gold Futures Fall a 2nd Day; Stronger Dollar Cuts Demand
Latest news today from Bloomberg from Forex Trading Floors Academy.
Gold futures fell for a ninth time in 10 days as a stronger dollar curbed demand for the metal that reached a four-year low last week.
The Bloomberg Dollar Spot Index climbed near a five-year high before a report this week economists said will show retail sales rebounded in October. Gold slipped 4.2 percent this year as the greenback advanced on expectations that an improving U.S. economy will spur the Federal Reserve to raise interest rates.
Rising rates cuts gold’s allure because bullion generally offers investors returns only through price gains, while a stronger dollar typically curbs demand for a store of value. Investors are holding the least through gold-backed funds in more than five years. Still, volumes for the Shanghai Gold Exchange’s benchmark bullion spot contract rose to the second-highest level in a month today. China is the world’s biggest bullion buyer.
“Unless the dollar reverses direction again, we look set for lower” prices, David Govett, head of precious metals at broker Marex Spectron Group in London, said in a note. “Although there are signs of physical demand around, there is not nearly enough to halt the continued selling.”
Gold for December delivery fell 0.7 percent to $1,151.50 an ounce on the Comex in New York by 11:08 a.m. London time. It reached $1,130.40 on Nov. 7, the lowest since April 2010. Bullion for immediate delivery was little changed at $1,152.40 in London, according to Bloomberg generic pricing.
Futures trading volume was 37 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg show.
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