Gold Closes At One-Month Low On Fed Worries

By Ira Iosebashvili

Gold prices fell to their lowest in a month on Tuesday, with investors reluctant to bet on the precious metal ahead of U.S. employment numbers later this week.

Gold for December delivery, the most actively traded contract, closed down 1.9% at $1,114.14 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest settlement since Oct. 2.

Federal Reserve officials kept short-term interest rates unchanged near zero last week but opened the door wider to the Fed raising rates at its final 2015 meeting in December. A strong U.S. nonfarm payroll number on Friday would bolster the case for the Fed to raise rates this year. Higher rates are bad news for gold, which pays its holders nothing and struggles to compete with yield-bearing investments when borrowing costs rise.

"People are taking the Yellen's words very seriously," said Bart Melek, head of commodity strategy at TD Securities. "It's a foolish investor that trades against the Fed."

Fed funds futures, used by investors and traders to place bets on central-bank policy, showed on Tuesday that the market sees a 50% likelihood of a rate increase at the Fed's Dec. 15-16 policy meeting, according to data from CME Group. The probability was 38% before the Fed's interest-rate statement on Oct 28.

A stronger dollar added to the pressure on gold. The Wall Street Journal Dollar Index, which gauges the U.S. currency against a basket of 16 currencies, was recently up 0.1% at 88.63, less than a point away from a multiyear low set in March. Gold, which is priced in dollars, becomes more expensive to foreign investors when the dollar rises.

Settlements 
LBMA Gold Fix PM $1,123.10; Previous PM $1,134.00 
Dec gold $1,114.10, down $21.80; Range $1,113.60-$1,138.00 
Dec silver $15.239, down 16.9 cents; Range $15.200-$15.450 
Jan platinum $962.20, down $16.20; Range $960.10-$984.40 
Dec palladium $644.00, down $6.35; Range $639.80-$655.10 

Write to Ira Iosebashvili at [e-mail]

(END) Dow Jones Newswires

November 03, 2015 15:34 ET (20:34 GMT)

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