Gold falls B200 as oil prices dip

Gold prices tumbled 200 baht at its opening in Bangkok at 9am on Saturday.

The Gold Traders Association announced the buying price at 18,150 baht and the selling price at 18,250 baht per baht-weight for gold bars.

The buying price for gold ornaments was 18,250 while their selling price was 18,650 baht per baht-weight.

The prices were adjusted four times on Friday, ending with a total loss of 250 baht per baht weight from Thursday's close.  

In world markets, gold futures capped the biggest decline in three weeks as a stronger dollar and plunging energy prices curbed demand for the metal, Bloomberg reported from New York today.

Benchmark Brent crude yesterday fell the most in more than three years after the 12-nation Organization of Petroleum Exporting Countries kept its output target unchanged, cutting gold’s appeal as an inflation hedge. The dollar rose to a five- year high against a basket of 10 currencies on speculation that lower energy prices will boost the US economy, paring demand for bullion as an alternative investment.

Gold is heading for a second straight annual loss, the longest slump since 1998, after the dollar strengthened and inflation failed to accelerate this year. Societe Generale SA trimmed its price forecast for bullion this week, saying the Federal Reserve will boost interest rates by mid-2015 as US economic growth improves.

“There was a selloff in crude oil and the dollar rallied, and there’s a question of disinflation here,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. “One of the motives to buy gold is to hedge against inflationary pressure, and we’ve got the opposite.”

Gold futures for February delivery fell 1.8% to settle at $1,175.50 an ounce at 12.51pm on the Comex in New York, the biggest decline since Nov 5. Floor trading was shut yesterday for Thanksgiving.

Restrictions on gold imports in India were withdrawn, effective immediately, the Reserve Bank of India said. A Finance Ministry official said the country scrapped the “20:80” rule to remove distortions in shipments of gold into India and exports of jewellery.

“It might look good on the official books, but I think the impact on gold wasn’t near as robust as some would have hoped,” Mr Melek said. Even with the rule, “you already had informal channels develop” for buying and selling gold, he said.

Switzerland will vote Nov 30 on an initiative that would require the central bank to hold at least 20% of its assets in gold from about 8% now. A plurality of voters oppose the measure, though a portion were still undecided, polls released last week showed.