Gold Drops to Eight-Month Low


Gold Drops to Eight-Month Low

On Monday, gold dropped to the weakest since January while silver dropped to a four-year low amid speculations that the US Federal Reserve will increase its interest rates sooner that analysts expectations.

Spot gold reached lows of $1,208.36 and dropped 0.2% at $1,213.70 per ounce. US December delivery gold futures dropped $2.30 per ounce at$1,214.30 off the $1,208.80 low.

Silver was at its weakest since Jun. 2010 at $17.30 per ounce, and later dropped 0.3% to $17.68 per ounce.

Reuters quoted Deutsche Bank head of commodities, Michael Lewis as having said, “Both gold and silver will have problems, given that we’re bullish on the dollar, real interest rates are going up and we think equity markets are still good value and will rise more. All of those are going to be bad for precious metals.”

Precious metals have experienced drastic losses recently as the US stocks surged to record highs while the dollar index hit its four-year peak on the expectations that the world’s largest economy will tighten its rates soon.

Bloomberg quoted STA Wealth chief strategist, Lance Roberts as having said in a telephone interview, “People want the dollar and not gold. Gold will continue to remain out of favor as people are expecting rates to rise.”

Bank of Nova Scotia head of precious metals, Simon Weeks said, “Clearly there are those out there, with the Dow at record highs, who believe that recovery is here or on its way, and that the next move in interest rates is going to be higher-it’s a question of when, rather than if.”

On the New York Mercantile Exchange, October delivery platinum futures dropped 0.3% to $1,333.10 per ounce. The metal reached $1,327, the weakest from December 24.

December delivery Palladium futures dropped 0.8% to $806 per ounce. The price hit $801.25, the lowest from May 12.

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