Gold Drops to Lowest Since January While Platinum Slides

By Nicholas Larkin and Glenys Sim

Gold fell to an eight-month low in New York as signs of an improving U.S. economy strengthened the dollar and curbed demand for a protection of wealth. Platinum sank to an almost 15-month low and palladium declined.
The dollar climbed to a four-year high against 10 major currencies after data showed yesterday sales of new U.S. homes surged in August and before a report tomorrow that analysts said will show economic growth quickened.
Bullion is headed for the first quarterly loss in three and Goldman Sachs Group Inc. repeated a forecast for gold to decline this year. Federal Reserve officials raised interest-rate forecasts last week, even as they maintained a pledge to keep rates low for
a considerable time to aid the recovery.
“It’s all on the back of the stronger dollar” and improving U.S. economy, Bernard Sin, the head of currency and metal trading at MKS (Switzerland) SA, a Geneva-based refiner, said today by phone. Still, lower prices have attracted more physical purchases and demand may increase ahead of the Golden Week holiday next week in China, the largest buyer, he said.
Gold for December delivery fell 0.7 percent to $1,210.70 an ounce on the Comex in New York by 7:31 a.m. It reached $1,206.60, the lowest since Jan. 2, and is up 0.7 percent this year. Gold for immediate delivery declined 0.6 percent to $1,210.29 in London, according to Bloomberg generic pricing.
Futures trading volume was 28 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg show.

Goldman Sachs

Jeffrey Currie, head of commodities research at Goldman Sachs, maintained the bank’s forecast for gold to drop to $1,050 by the end of 2014. Support to prices from political uncertainty in Ukraine and the Middle East earlier this year has faded, and inflation is expected to be subdued, Currie said.
Holdings on gold-backed exchange-traded products are at the lowest in five years, data compiled by Bloomberg show.
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 for delivery in December fell 1.2 percent to $17.495 an ounce in New York. It reached $17.325 on Sept. 22, the lowest since July 2010. Palladium for December delivery slid 2 percent to $803.85 an ounce, after touching $795.50, the lowest since May 7. Platinum for January delivery lost 0.9 percent to $1,308.40 an ounce, after reaching $1,300.30, the lowest since June 28, 2013.
Platinum, which traded at a 10-month high in July, slid 4.8 percent this year even as demand for the commodity used in pollution-control devices in cars improved, and supplies from South Africa, the world’s largest producer, were curbed by a strike that ended in June.