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Gold neared its lowest value in four years after a surprise stimulus boost from the Bank of Japan (BoJ) coupled with the closing of the Federal Reserve’s bonds buying program drove down demand for a safe haven and lifted up the US dollar.
Spot gold dropped by as much as 1% today for a price per ounce of $1,161.75 and was trading late morning Singapore time at $1,167.56, based on generic pricing from Bloomberg. The precious metal recorded its first consecutive losing months and reached its lowest level since July 2010 last week when it fell to $1,161.35. Gold is no on track to have its first yearly decline since 2000 with prices already lower this year by 2.8% to extend last year’s 28% drop.
Senior economist Felicity Emmet from the Australia & New Zealand Banking Group Ltd. says that, “One printing press stops and another one cranks up. Gold and silver prices slumped, both trading against the U.S. dollar strength.”
Both Goldman Sachs Group Inc. and Societe Generale SA are predicting further declines for gold. The US central bank is now believed to be assessing the timing of its first interest rate hikes, pushing the Bloomberg Dollar Spot Index up to its highest in four years.
Futures for gold with a delivery date in December fell by as much as 0.9% for a price per ounce of $1,161 in New York’s Comex. The contract dropped to its lowest since July 2010 of $1,160.50 on October 3st when the BoJ first announced an unexpected move to expand policy by increasing its monetary base in order to raise up inflation in the country.
Assets under the SPDR Gold Trust, the largest exchange traded product backed by gold, remained the same on October 31st after decreasing to its smallest amount since 2008 on October 30th.
Spot silver lost 1.6% after recording its fourth straight losing month for a price per ounce of $15.901. It has declined by 18% so far this year year to follow up on last year’s 36% fall.
Platinum for immediate delivery retreated by 0.8% for the fourth consecutive day for a price per ounce of $1,226.88, while palladium was up at $794.65 per ounce from last week’s $792.47.
