Gold futures rose as a decline in U.S. equities reignited demand for an alternative asset.
The Standard & Poor’s 500 Index of shares headed for the biggest losses since July. Gold has fallen 5.1 percent this month amid a rally to record for U.S. stocks. Bullion also rebounded today as the dollar pared gains.
The metal is moving closer to erasing its 2014 advance as the greenback climbs to a four-year high against 10 major currencies, cutting the appeal of alternative investments. Bullion is headed for its first quarterly loss this year amid bets that the U.S. recovery will prompt the Federal Reserve to boost interest rates before its peers.
“The stock market’s big drop is providing some temporary support to gold,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Also, there could be some physical buying” after prices reached new lows, he said.
Gold futures for December delivery rose 0.2 percent to settle at $1,221.90 an ounce at 1:40 p.m. on the Comex in New York, after reaching $1,206.60, the lowest for a most-active contract since Jan. 2. Prices are up 1.6 percent this year.
Goldman Sachs Group Inc.’s Jeffrey Currie said “risks are significantly skewed to the downside” for gold, and maintained the bank’s forecast for prices to drop to $1,050 by the end of 2014. Support from political tension in Ukraine and the Middle East earlier this year has faded, and inflation is expected to be subdued, he said.
“Gold will continue to react to the U.S. data and also to the dollar strength,” Scott Gardner, who helps manage $450 million at Verdmont Capital SA in Panama City, said in a telephone interview.
Central banks from Russia to Ukraine increased gold reserves in August as Mexico and Czech Republic trimmed holdings, International Monetary Fund data showed. The Kyrgyz Republic, Kazakhstan and Azerbaijan also showed higher gold reserves for the month, figures on the IMF website showed.
Silver futures for delivery in December fell 1.5 percent to $17.438 an ounce on the Comex, after reaching $17.27, the lowest since June 2010.
On the New York Mercantile Exchange, platinum futures for January delivery lost 0.4 percent to $1,315 an ounce, after reaching $1,300.30, the lowest since June 28, 2013. Palladium for December delivery fell 2.1 percent to $802.75 an ounce, after touching $795.50, the lowest since May 7.
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