Gold Drops To 9-Month Low as Dollar Hits 4-Year Peak; Break below $1,200/oz

Bareksa.com - Gold prices fell to a nine-month low on Thursday and other precious metals slid as the dollar rose to four-year highs against a basket of currencies and stock markets strengthened.

Platinum fell to its lowest since June last year, sliding below $1,300 an ounce, and silver and palladium also tumbled.

Spot gold hit a low of $1,206.85 an ounce, its weakest since Jan. 2, and was down 0.5 percent at $1,210.30 an ounce at 1001 GMT. U.S. gold futures for December delivery were down $8.70 an ounce at $1,210.80.

A run of upbeat U.S. data has highlighted the diverging economic outlook for the euro zone and the United States. Expectations are growing that the Federal Reserve will begin tightening rates early next year.

The prospect of diverging monetary policy between the Fed and the European Central Bank sent the euro to a 22-month low against the dollar.

U.S. policy and currency moves are the "one and only driver" of the gold market at present, VTB Capital analyst Andrey Kryuchenkov said.

"A stronger greenback and little or no inflation for the major economies remain the key threat to bullion's upside as we head into 2015," he said.

"Notably ... the world's largest ETF provider was still reporting ETF outflows following a pronounced plunge in its physical book last week," he added. "The physical interest in Asia remains anaemic, and we still see little chance for a sustained price rebound without any consumer buying here."

Holdings of gold exchange-traded funds, popular investment vehicles which issue securities backed by bullion, have fallen by close to a million ounces this month, their biggest monthly outflow this year, according to Reuters data.

Investors will be watching more U.S. data due later on Thursday, including durable goods orders for August, to gauge the strength of the world's largest economy and the implications for the Federal Reserve's monetary policy and the dollar.

Physical demand has been subdued this year after a record 2013, when prices slumped by 28 percent. Buying of physical gold in top market China was light on Wednesday, traders said, even ahead of the Golden Week holiday next week.

China's net gold imports from main conduit Hong Kong slid to their lowest since May 2011 in August due to adequate stocks from earlier purchases and as consumer demand remained weak, data showed on Thursday.

News of central bank purchases failed to support gold. Russia added to its gold holdings in August, while Kazakhstan raised its holdings by nearly 800,000 ounces.

Among other precious metals, spot silver was down 0.9 percent at $17.50 an ounce, spot platinum was down 0.7 percent at $1,304.50 an ounce, and spot palladium was down 1.7 percent at $800.25 an ounce.

Platinum earlier fell to its lowest since June 2013 at $1,295.25 an ounce, while palladium slid to its lowest since late April at $792 an ounce.

The chief executive of Russia's Norilsk Nickel said on Wednesday the company, the world's largest palladium producer, and a group of private investors were in talks to buy palladium worth up to $2 billion from the country's central bank.

"With 2.4 million ounces involved, close to one-year's worth of Russian mine supply, this is a bearish development - should it materialize," UBS said in a note. "The uncertainly surrounding it alone should push palladium lower." (Source: Reuters)