Bullion for immediate delivery lost as much as 2.6 percent to $1,167.49 an ounce, the lowest since July 2010, and traded at $1,177.26 at 4:13 p.m. in Singapore, Bloomberg generic pricing shows. Silver slid as much as 3 percent to $16.0009 an ounce, the lowest since February 2010. They fell as the dollar rose to the highest in more than six years against the yen.
The Fed is weighing the timing of interest-rate increases as other central banks add to stimulus to boost their economies. The Bank of Japan said it’s targeting an 80 trillion yen ($726 billion) expansion in the monetary base, up from 60 to 70 trillion yen before. Gold yesterday erased the year’s advance after U.S. gross domestic product beat estimates and China probed a surge in precious-metals exports.
“People are generally looking at the direction of the dollar, which moved higher against the yen after the BOJ announcement, although the news itself is neutral for gold,” said Wallace Ng, a Shanghai-based trader at Gemsha Metals Co. “A higher dollar depresses prices and sentiment in the gold market was already weak because of the Fed.”
Bullion is heading for a decline of 4.4 percent this week, the most since September 2013. The metal is also set for the first consecutive monthly loss in 2014. Holdings in the SPDR Gold Trust shrank for a third day to 741.2 metric tons yesterday, the least since Oct. 2008.
Gold rose 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent. Prices slumped 28 percent last year, the most in three decades, on expectation that the central bank will scale back its bond-buying program that was put in place to fuel growth while failing to stoke inflation.
The U.S. central bank, which has held its key rate at zero to 0.25 percent since 2008, this week cited an improving job market in deciding to end bond buying, while maintaining a commitment to keep rates low for a considerable time. It also said inflation is running below its 2 percent target.
“Precious metals cratered, hit by a double-whammy of the rather hawkish Fed policy statement, coupled with a stronger-than-expected U.S. GDP report,” Edward Meir, an analyst at INTL FCStone Inc., wrote in a note. “Gold is again confronting the specter of a stronger dollar, rising equity prices and tame inflation, a trifecta that does not bode well for price prospects going into 2015.”
Futures for December delivery fell as much as 2.7 percent to $1,166.20 an ounce on the Comex inNew York, the lowest level since July 2010, before trading at $1,175.80.
The collapse of oil prices into a bear market amid rising global supplies has also cut inflation concerns. The chances of bullion dropping to $1,000 are increasing as cheaper energy “means lower inflation and adds to the bearish gold story,” said Michael Haigh, head of commodities research at Societe Generale SA, who correctly forecast the metal’s 2013 rout.
The bank isn’t alone in predicting more losses for gold, which is Morgan Stanley’s least preferred metal. Jeffrey Currie, Goldman Sachs Group Inc.’s head of commodities research who also correctly forecast 2013’s slump, said last month that the worst isn’t over yet for gold. He expects prices to drop to $1,050 by the end of year.
Concern that demand may falter in the world’s largest users also hurt prices. China sent investigators to probe a seven-fold surge in September’s precious-metals exports. In India, the biggest consumer after China, imports are set to drop in October after a more than four-fold jump last month.
Gold of 99.99 percent purity on the Shanghai Gold Exchange, the benchmark, sank as much as 3.1 percent to 230.05 yuan per gram ($1,172.35 an ounce), the lowest level this year. Volumes tumbled to a one-month low today.
Silver for immediate delivery slid 2.4 percent to $16.1078 an ounce, set for a fourth monthly decline that’s the worst run since June 2013. An ounce of gold bought as much as 73.3154 ounces of silver today, the most since April 2009.
Spot platinum decreased as much as 1.8 percent to $1,223.05 an ounce, the lowest since Oct. 6. It’s heading for a fourth month of losses that’s the longest stretch since June 2013. Palladium slipped 0.1 percent to $779.67 an ounce.