Gold falls B100 to B18,050 as Fed rate hike looms

Gold prices dropped 100 baht to 18,050 baht per baht-weight in Bangkok on Saturday.

The Gold Traders Association announced the buying price at 17,950 baht and the selling price at 18,050 baht per baht-weight for bullion.

For ornaments, the buying and selling prices were 17,691.72 baht and 18,450 baht per baht-weight respectively.

The prices were adjusted twice on Friday, down 50 baht from the previous day.

Bloomberg reported from Singapore on Saturday gold fell to the lowest in five years as bets that the US will raise interest rates next month increased, curbing the metal’s appeal.

The probability of the Federal Reserve increasing interest rates for the first time since 2006 rose to 74% on Friday from 72% on Thursday, Fed-fund futures data show. The US dollar, which typically moves inversely to gold, rose 0.2% against a basket of 10 leading global currencies.

Raising rates “increases the opportunity cost of holding gold,” said Bernard Dahdah, a precious-metals analyst at Natixis SA in London.

“Gold has zero yield — it actually costs you money to hold it — so there’s more incentive to put your money into a yield-earning dollar investment."

Bullion for immediate delivery dropped 1.5% to $1,056.48 an ounce by 1.39pm in London, according to Bloomberg generic pricing. If the decline holds, gold is headed for its sixth straight week of losses, the longest such run since August.

The metal is trading at its lowest levels since February 2010 as investors weigh the prospects of higher US interest rates after data pointed to a strengthening economy. With gold typically seen as a haven asset, demand for the metal is falling on the prospect of higher returns in US securities.