Gold steady but outlook murky

Gold prices were unchanged at its opening at 9.28am on Saturday.

The Gold Traders Association announced the buying price at 18,550 baht and the selling price at 18,650 baht per baht-weight for gold bars.

The buying price for gold ornaments was 18,282.96 while their selling price was 19,050 baht per baht-weight.

The prices were adjusted four times on Friday, ending down 150 baht from Thursday's close.  

In world markets, Bloomberg reported from New York gold-options traders are pulling out of bets on a rally as gains for the dollar and US equities curb the appeal of precious metals as alternative assets.

A call giving owners the right to buy February futures at $1,300 an ounce, yesterday’s most-traded option, plunged 61% this week, the most ever. The three options contracts with the most volume yesterday were calls that fell. Gold futures posted the first weekly decline this month.

Bullion is on pace for a second straight annual decline for the first time since 1998. The dollar extended its gain this week to a five-year high against a basket of 10 currencies, and US stocks are up for a third straight day. Holdings in exchange-traded funds backed by gold have dropped for eight of the past nine weeks.

“I don’t think many people expect prices to rise when the environment is more or less anti-gold,” Fain Shaffer, the president of Infinity Trading Corp in Indianapolis, said yesterday. “A stronger dollar and a rally in equities are a lethal combination.”

The February $1,300 call dropped 11% to $2.40 at 1.57pm on the Comex in New York, a record low for the contract. An estimated 3,925 lots changed hands yesterday. Gold futures for February delivery, the most-active by open interest, settled at $1,196, dropping 2.2% this week.

An estimated 2,000 lots of a $1,350 January call traded yesterday, the third-most-active option. The contract tumbled 50% yesterday to an all-time low of 10 cents and was unchanged today.

Rate outlook

The Federal Reserve signalled this week it would raise borrowing costs next year, curbing the appeal of gold as a store of value. While Fed chair Janet Yellen said yesterday she doesn’t foresee an interest-rate increase for “at least the next couple of meetings,” she added there is “no pre-set time” and “no meeting is off the table.”

Bullion surged 70% from December 2008 to June 2011 as central banks increased money supply on an unprecedented scale, spurring concerns that inflation would accelerate. The metal tumbled 28% in 2013, the biggest drop in three decades, amid gains for the US economy.

This year, gold declined 0.6% through yesterday.