Gold futures dropped to near a low of two-weeks on Friday with weaker oil prices and the stronger dollar pressuring the appetite of investors for inflation protection.
February delivery, the most actively traded contract, dropped 1.8% or $22 settling at $1,175.50 per troy ounce on the Comex of the New York Mercantile Exchange. This is the lowest settlement level since November 13 when the prices settled at $1,161.50 per ounce, as reported by The Wall Street Journal.
Gold futures were lower with the US investors having a chance to react to the Thursday decline in prices of crude oil. The Organization of the Petroleum Exporting Countries said on Thursday that it would leave its output quotas unchanged. This decision comes amid plentiful global supplies that have pushed the benchmark prices lower by more than 35% since June.
The tumbling costs of energy are turning up heat on investor demand for gold, as reported by George Gero, senior vice president at RBC Capital Markets Global futures.
Gero said, “Manufacturing costs are sure to go down because of low crude prices-trucking, transportation and utility costs will go down too.”
Traders have shifted sights to Switzerland, where the voters will decide on Sunday on the referendum that calls for the Swiss National Bank to hold 20% of its reserves in gold, from th current 8%.
Analyst with Standard Bank, Leon Westgate said, “If the vote is no, as expected, then gold would likely fall back toward the early November lows.
Bloomberg quoted Bart Melek, head of commodity strategy at TD securities as having said, “There was a selloff in crude oil and the dollar rallied, and there’s a question of disinflation here. One of the motives to buy gold is to hedge against inflationary pressure, and we’ve got the opposite.”
On the New York Mercantile Exchange, platinum futures for January delivery dropped 1.4% to $1,211.30 per ounce. March delivery palladium futures advanced 1.3% to $813.30 per ounce after they touched $816.10, the highest for the most active contract since September 25.
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