New York - Gold held its biggest decline this month on concern that cratering commodity prices are weighing on inflation, curbing the metal’s appeal as a hedge against rising prices.
Bullion for immediate delivery was little changed at $1 167.30 an ounce by 10:53 a.m. in London after losing 0.8 percent Wednesday, the biggest drop since Sept. 30, according to Bloomberg generic pricing. That followed gains last week to the highest level in more than three months as concern waned that the Federal Reserve will raise interest rates soon. The Bloomberg Commodity Index in August dropped to the lowest level since 1999.
“The market pushed gold above the 200-day moving average last week, but it appears it could not hold on to gains,” Georgette Boele, an Amsterdam-based strategist at ABN Amro Bank NV, said by e-mail. “It looks as if the rally has run its course.” The moving average marks a key price level watched by some traders who rely on chart patterns. Investors will be cautious of big moves in gold before a Fed meeting next week, Boele said.
Fed outlook
The Fed is likely to keep rates unchanged until March 2016, according to futures data collected by Bloomberg. Traders now predict only a 32 percent likelihood of a rate increase in December, down from 43 percent at the beginning of the month.
Holdings in exchange-traded products backed by gold climbed for the eighth time in nine sessions, according to data compiled by Bloomberg as of Wednesday. Holdings increased 0.3 metric tons to 1,545.3 tons, the highest since July 24.
Gold futures were little changed at $1,166.70 an ounce on the Comex in New York after losing 0.9 percent on Wednesday. Volume traded was 24 percent below the 100 day average for the time of day.
Platinum dropped 0.5 percent to $999.85 an ounce, palladium was 0.4 percent lower at $673.15 an ounce. Silver gained 0.5 percent to $15.7741 an ounce.
BLOOMBERG