Gold Holds Decline From Two-Week High as Dollar Gains, Oil Drops

02:38 PM @ Tuesday - 18 November, 2014
Gold held a retreat from the highest level in two weeks after the dollar strengthened and energy prices dropped, curbing demand for the metal as an investment. Silver and palladium declined.

Bullion for immediate delivery traded at $1,186.35 an ounce at 12:20 p.m. in Singapore from $1,186.57 yesterday, Bloomberg generic pricing showed. The metal yesterday rose to $1,194.38, the highest price since Oct. 31, before erasing gains to end 0.2 percent lower.

Gold is heading for the first consecutive annual loss since 2000 as the Federal Reserve assesses the timing of interest-rate rises while other central banks take steps to spur growth, strengthening the dollar. The Bloomberg Dollar Spot Index traded near a five-year high as the euro weakened after European Central Bank President Mario Draghi said that policy makers could use bond-buying to stimulate the economy.

“Differences in economic fundamentals between the U.S. and Europe, Japan and China has led to a divergence of monetary policies, which is the background of the dollar’s continued strength,” said Yang Xi, a Hangzhou, China-based analyst at Yongan Futures Co. “Precious metals have also been hurt as oil prices continue to decline and inflationary concerns recede.”

In Japan, Prime Minister Shinzo Abe may put off a sales-tax increase, add stimulus and call an election after data yesterday showed the economy fell into recession, sending the yen to a seven-year low against the greenback. The Bank of Japan meets on policy this week as the Fed releases minutes of its Oct. 28-29 gathering, when it ended its asset-purchase program on schedule.

Oil Drops

West Texas Intermediate crude fell for a second day even as investors weighed prospects for a supply cut by the Organization of Petroleum Exporting Countries next week. The benchmark lost 0.4 percent to $75.34 a barrel and is 23 percent lower this year.

Gold for December delivery traded at $1,185.80 an ounce on the Comex in New York from $1,183.50 yesterday, when prices slid 0.2 percent after rising to a two-week high of $1,193.60. Holdings in the SPDR Gold Trust, the largest ETP backed by the metal, expanded for the first time in two weeks yesterday, climbing from a six-year low.

Silver for immediate delivery fell 0.2 percent to $16.1131 an ounce, after declining 1 percent yesterday. Spot platinum traded at $1,200.94 an ounce from $1,201.38 yesterday, when prices slid 1 percent. Palladium decreased 0.3 percent to $767.75 an ounce.
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