Futures & Commodities

Gold nears three-month low on dollar, US rate rise bets

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Gold fell toward a three-month low on Tuesday as the dollar hit a seven-month peak on prospects the U.S. Federal Reserve will raise interest rates in December, while silver and platinum extended losses to multi-week troughs.

A forecast-beating U.S. October employment report on Friday pushed up bets the Fed will increase rates for the first time in almost a decade, sending non-interest paying gold to $1,084.90 an ounce, the lowest level since August.

"I don't think a December rate hike is completely priced in ... we can see more losses in gold," Natixis analyst Bernard Dahdah said.

Gold will only get worse: Gartman
Gold will only get worse: Gartman

"Once the news comes out, the attention will turn into how quickly the cycle will tighten and the higher the rates, the lower the price of gold."

was down 0.2 percent at $1,089.31 an ounce, while U.S. gold for December delivery settled up 40 cents at $1,088.50 an ounce.

Bullion has fallen in nine of the past 10 sessions, a move that has weakened its technical picture. The next support is set at the 5-1/2 year trough of $1,077 hit in July, analysts said.

The dollar rose 0.2 percent against a basket of currencies, hitting a new seven-month peak.

The U.S. currency has strengthened against the euro after four governing council members said a consensus was forming at the European Central Bank to take one of its benchmark interest rates deeper into negative territory in December.

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"It's very possible we are going to see a breach of the $1,077 support... particularly if the ECB starts to expand their quantitative easing program in December, then we may see some further strength in the dollar," Mitsubishi Corp strategist Jonathan Butler said.

Silver slipped to $14.27, its lowest since Sept. 15.

"We haven't seen much physical demand and there's hardly any speculative interest as of late," said Dan Izzo, broker for RJ O'Brien in New York, referring to the platinum group metals.

"With the Fed hike looming, there's no precious metals allure to them. They're trading strictly as industrial metals. That's the reason they've been hit the hardest."

Spot platinum fell for the ninth straight session by as much as 2 percent to a five-week low of $892 an ounce. Palladium gained 0.2 percent to $597 an ounce, hovering just above a seven-week low reached Monday, when prices tumbled 4 percent to $592.50, the lowest in seven weeks.