Gold, platinum at multi-year lows on fund outflows

Singapore: Gold fell for a twelfth session out of thirteen on Friday, trading close to a near six-year low on rising bets that the Federal Reserve would hike U.S. rates next month and as investors pull out of bullion-backed funds.

Spot gold fell 0.2 per cent to $1,082.90 an ounce by 0705 GMT, and on track to post a fourth straight weekly dip. The metal tumbled to $1,074.26 in the previous session, the lowest since February 2010.

The platinum group metals (PGMs) also tracked gold lower. Platinum tumbled to a near seven-year low of $865.25 on Thursday, and was eyeing its worst weekly drop in four years.

Palladium fell to a 2-1/2-month low of $530.75, and with a 12 per cent drop, was headed for its worst week since September 2011.

"While we find physical demand for the PGMs from industrial sources to be broadly steady, investors are retreating and we see no early signs of further production restraint," HSBC analyst James Steel said.

"Either a sector-wide rally in commodity prices or tangible evidence of production cuts are required to engineer a rally in the PGMs," he said, adding that gold could also see more losses.

Holdings of platinum exchange traded funds (ETFs) are at a two-year low, while assets of palladium funds are at their lowest since April 2014.

Assets of SPDR Gold Trust, the top gold ETF, fell to 661.94 tonnes on Thursday, the lowest since September 2008. Holdings of all gold funds are at their lowest since March 2010. Sustained outflows could add to the pressure on the metal prices, already hit by the strength in the dollar.

Bullion has been under pressure recently as expectations for a December rate hike in the United States strengthened after a robust nonfarm payrolls report earlier this month. Fed officials lined up behind a likely December interest rate hike on Thursday with one key central banker saying the risk of waiting too long was now roughly in balance with the risk of moving too soon to normalize rates after seven years near zero.

Higher rates could dent demand for non-yielding gold, while boosting the dollar. Traders will be eyeing U.S. data due later in the day, including retail sales, to gauge the strength of the economy and its impact on the Fed's monetary policy.

 

 

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