Futures & Commodities

Gold eyes fourth weekly loss as investors count on Fed rate rise

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Gold fell back towards near six-year lows on Friday, staying on track for a fourth straight weekly loss, on expectations the Federal Reserve is set to raise U.S. interest rates next month for the first time in nearly a decade.

A raft of Fed officials lined up behind a December rate rise on Thursday.

was at $1,083.21 an ounce, down 0.1 percent, having touched its lowest since February 2010 on Thursday at $1,074.26. U.S. gold futures for December delivery settled down 10 cents an ounce at $1,080.90.

More pain for gold?

Rising rates tend to weigh on gold, as they lift the opportunity cost of holding non-yielding assets while boosting the dollar. Gold has fallen more than 5 percent since the start of November, when a stronger-than-expected U.S. payrolls report fueled expectations for a near-term rate hike.

"Quite clearly, with the growing sense that there will be a December rate hike after the strong U.S. data last week, investors have been bailing out of gold," Citi analyst David Wilson said. "I suspect that is likely to continue."

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares, fell by another 1.5 tonnes on Thursday.

The platinum group metals also came under pressure from fund selling. Holdings of platinum ETFs were at a two-year low, while assets of palladium funds were at their lowest since April 2014.

"This additional near-term supply from ETFs and other liquidation took platinum to seven-year lows and undermined palladium also," HSBC said in a note.

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"While we find physical demand for the PGMs from industrial sources to be broadly steady, investors are retreating and we see no early signs of further production restraint."

Platinum was at $855.50 an ounce, down 2.1 percent, having earlier slid to its lowest since December 2008 at $854.

"PGMs are suffering with palladium having an ultimate breakdown towards critical long-term support near $518," said Amaryllis Gryllaki, sales associate for TD Securities' Global Metals in New York in a note.

"During Asia time it sold off 5 percent on less than 1,000 lots."

Palladium was down 3.9 percent at $536.50 an ounce after touching a 2-1/2-month low of $530.75. Prices of the autocatalyst metal are down more than 13 percent this week, its biggest weekly decline since May 2010.

Silver was down 0.5 percent at $14.20 an ounce, off an earlier 2-1/2 month low at $14.15.