Gold Falls to Lowest in a Month as Dollar Advance Saps Demand

Gold futures fell to the lowest in almost a month as the dollar climbed for a fourth day, reducing demand for the metal as an alternative asset.

Federal Reserve Bank of St. Louis President James Bullard said policy makers should consider raising interest rates at their next meeting, helping boost the greenback. The Bloomberg Dollar Spot Index headed for the longest rally in five weeks.

Gold has risen 15 percent this year as fluctuations in Equities Equities Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling pa Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling pa Read this Term and slowing growth in China increased the metal’s appeal as a haven. Bullion’s gains have slowed this month, with prices dropping in three of the past four sessions, as some Fed policy makers said recent economic data justify tighter monetary policy. Higher rates reduce the allure of gold, which doesn’t pay interest.

“You’re starting to get a number of Fed governors talking about April being back squarely on the table for the next interest rate hike,” Frank McGhee, the head dealer at Alliance Financial LLC in Chicago, said in a telephone interview. “In general, you have a stronger dollar resulting from a higher interest-rate environment, and gold has an inverse relationship.”

Gold futures for April delivery slid 2 percent to $1,224 an ounce at 1:43 p.m. on the Comex in New York, after touching $1,215.40, the lowest intraday price since Feb. 26. On Tuesday, the metal rose as much as 1.3 percent as haven demand increased following attacks in Brussels.

On Tuesday, Fed Bank of Chicago President Charles Evans said two interest-rate increases this year are “not at all unreasonable.” Fed-fund futures data show traders are pricing in a greater-than-even chance of a move in September.

In ETFs and other metals:

• Investors added to Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term-traded funds backed by gold for a sixth straight day, with holdings at 1,766.5 metric tons, the highest since March 2014, according to data compiled by Bloomberg on Tuesday.
• Futures data show traders are pricing in a 71 percent chance of a rate increase by December, up from 45 percent a month ago.
• Silver futures for May delivery slid 3.9 percent to $15.272 an ounce on the Comex, the biggest drop in four months. On the New York Mercantile Exchange, platinum and palladium also fell.

--With assistance from Eddie van der Walt To contact the reporter on this story: Joe Deaux in New York at jdeaux@bloomberg.net. To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Steven Frank

By: Joe Deaux

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