Gold trades near one-week low due to tepid demand due to strengthening of dollar

LONDON: Gold traded near the lowest in more than a week in New York as investors weighed reduced demand for a haven against signs of more physical purchases.

Gold fell to a one-week low of $1,226.30 an ounce on October 23 and declined 0.6% last week as global equities and the dollar strengthened. In top buyer China, volumes for the benchmark spot contract on the Shanghai Gold Exchange were near a twoweek high, the latest data show.

Equities reached the highest in two weeks on October 27 as none of Europe’s largest banks failed European Central Bank-led stress tests. The Federal Reserve is expected to end monthly asset purchases at its October 28-29 meeting. Traders have pushed back estimates for when the Fed will raise US interest rates as policy makers expressed concern that the economy may be at risk from a global slowdown.

"We believe the floor for gold has firmed in the short term, as physical buying has gained momentum," Barclays wrote in a report on October 27. "We continue to view rallies as opportunities to sell. Some of the gloom regarding the global growth outlook is improving. Fed watchers should keep a keen eye on any future changes to forward rate guidance."

Gold for December delivery lost 0.1% to $1,230.10 an ounce by 7:27 a.m. on the Comex in New York. Bullion for immediate delivery was little changed at $1,230.01 in London, according to Bloomberg generic pricing.

BULLISH POSITION

Futures trading volume was 29% below the average for the past 100 days for this time of day, data compiled by Bloomberg show.

Money managers’ net bullish position in gold rose 45% in the week ended October 21, the biggest gain since June, US Commodity Futures Trading Commission data show. Holdings in bullion-backed exchange-traded products contracted to a five-year low last week, data compiled by Bloomberg shows.

Silver for delivery in December added 0.1% to $17.20 an ounce in New York.

Palladium for delivery the same month rose 0.1% to $782 an ounce. Platinum for January delivery gained 0.4% to $1,256.50 an ounce. Platinum ETP holdings fell to 83.5 tonne on October 24, the lowest since May, data compiled by Bloomberg show.