London: Gold dropped close to its lowest in more than three months on Wednesday, looking set for an eighth consecutive session of losses as a robust dollar and expectations of higher US interest rates curbed appetite for the metal.
Spot gold was down 0.2 per cent at $1,158.55 an ounce by 1031 GMT, not far from its lowest since Dec. 1, the $1,155.60 hit in the previous session.
US gold for April delivery was down $2.60 an ounce to $1,157.50.
Stronger than expected US nonfarm payroll data on Friday/srenewed expectations that the Federal Reserve would begin to increase interest rates in June.
Higher rates could dent demand for assets that do not pay interest, such as gold, and boost the dollar, which was trading at its highest in more than 11 years against a basket of major currencies.
“I don’t expect prices to fall below $1,150 as opportunistic buying would come in at that level,” ING Bank senior strategist Hamza Khan said.
“The Fed has been so evasive in nailing down a date for an interest rate hike that until we actually see some concrete plans we are going to be trading within the $1,150 to $1,250 range.” A strong US currency makes dollar-denominated assets such as gold more expensive for holders of other currencies, often reducing demand.
The metal was also under pressure from firmer European shares, which bounced back after the previous session’s sell-off.
BARGAIN HUNTERS The drop in gold to multi-month lows has attracted some bargain hunters in Asia, the top bullion-consuming region, traders said.
In China, the metal was traded at a premium of about $5 an ounce to the London global benchmark, an indication of good buying interest.
Sustained physical buying could provide a floor for falling prices.
Weakness in gold spread to other precious metals, with platinum taking the biggest hit. Prices slumped to their lowest since July 2009 at $1,119.50 an ounce.
Silver was up 0.6 per cent at $15.71 an ounce, having dropped to a two-month low on Tuesday, and palladium was down 0.3 per cent at $798.95 an ounce.
