Precious Gold heads for third weekly drop as market awaits Fed

by **Cals** Fri 11 Sep 2015, 20:14

Precious

[size=28]Gold heads for third weekly drop as market awaits Fed

By Reuters / Reuters | September 11, 2015 : 6:22 PM MYT

LONDON (Sept 11): Gold eased on Friday, weighed down by a firmer dollar, while uncertainty over the timing of the Federal Reserve's first interest rate increase in nearly a decade held prices in a narrow range.

The precious metal is on track to fall for a third successive week, down 1.3%, after touching a three-week low at $1,101.11 an ounce on Wednesday.

Spot gold was down 0.4% at $1,107 an ounce at 0940 GMT, while US gold futures for December delivery were down $2.60 an ounce at $1,106.70.

Traders are awaiting the Fed's next policy statement on Sept 17 for clues on the timing of a US interest rate rise, before taking any big positions in gold.

Gold has benefited in recent years from ultra-low rates, which cut the opportunity cost of holding non-yielding bullion while weighing on the dollar, in which it is priced.

Concerns over slowing growth in China, mixed economic data and volatility in financial markets have increased uncertainty about the timing of any rate increase, which had been expected as early as this month.

"Our bank still officially expects September to be the date at which they increase rates, but if you look at the applied probability, it's at 28% as opposed to 55% back in early August," Natixis analyst Bernard Dahdah said. "So the market sentiment is that it's less likely."

The dollar edged 0.1% higher against a basket of currencies on Friday.

Global stocks slipped into the red but remained on track for their biggest weekly gain in eight as investors grappled with the possibility of US interest rates rising next week.

Physical gold demand among the major Asian consumers was relatively soft. Gold closed out the week in a quiet fashion overnight in Asia, MKS said in a note, supported by modest Chinese demand but holding a tight range.

Two straight years of drought in India — for only the fourth time in over a century — have hit gold demand there and could cut imports by up to 10% in 2015, the head of a southern Indian regional gold federation said.

"A drop below $1,100 an ounce may elicit greater physical demand," HSBC said in a note.

Among other precious metals, silver was down 0.4% at $14.61 an ounce, while platinum was down 0.5% at $973 an ounce and palladium was down 1.1% at $581.50 an ounce.

Palladium has been the best performing precious metal this week, rising 1.9% to snap three weeks of losses.
[/size]