Gold prices dropped the third day with gains for the US economy cutting demand for the metal as a haven.
Bullion declined on Friday as crude futures retreated, cutting the demand for gold as a hedge against the rising consumer costs.
Futures dropped to lows of four years in November with the acceleration of US growth, the dollar climbing and equities rallying. Gains for labor markets are increasing speculation that the Federal Reserve is getting closer to raising interest rates, reducing the allure of gold.
Bloomberg quoted Miguel Perez-Santalla, sales and marketing manager at Heraeus Metals as having said in a telephone interview, “The engine of the US market is continuing to improve, and that’s the biggest bear for gold. The economy is booming. Jobs are starting to increase, and for the first time I think the US is starting to get off the ground.”
February delivery gold futures dropped 0.3% settling at $1,222.50 per ounce on the Comex in New York. The prices hit $1,130.40 on November 7, the lowest from 2010.
Commerzbank analyst, Daniel Briesemann was quoted by Reuters as having said, “When the equity markets dropped quote sharply, precious metals soared, so there is definitely still the link between equities and gold in particular due to risk appetite among market players.”
He added, “Some of the equity markets had a decent run this year. We don’t expect this to be continued to the same extent next year, so this might give some tailwind to gold prices.”
Futures rose 70% from Dec 2008 to Jun 2011 as the Fed bought debt and held borrowing costs near zero percent in a bid to shore up economic growth.
In other metals, silver dropped 0.5% at $17.00 per ounce while spot platinum dropped 1.1% to $1,224.50. Spot palladium dropped 0.7% at $810.30.
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