Low Precious Metals Prices Spark Surge in Purchases

Gold traders are getting very predictable. For each day this week, the precious metal has gained a few dollars in the Asian session to give it back during the European session. Gold is trading at 1088.10 almost identical to the price this time on Wednesday. Gold added $3.20 as the dollar weakened a bit in the morning. Silver added 77 points to 14.34 while Platinum gained $4.20 as traders bought up the cheap metal after it fell below the $900 price.

The dollar weakened against most of its major peers, with New Zealand and South Africa’s currencies among the biggest gainers, as investors tempered bets that a Federal Reserve interest-rate increase in December will fuel a further advance in the greenback.

The U.S. currency has struggled to extend gains that pushed it at least 1 percent higher against all of its 10 developed-nation counterparts this month. The probability that the Fed will raise rates by next month was 66 percent, compared with 50 percent at the end of October, after a Labor Department report last week showing the biggest increase in jobs this year backed the case for the Fed to act at its December policy meeting.

Gold continues to trade near a four-month low in Asia on Thursday as expectations build for a U.S. rate rise in December. Investors have been exiting from the precious metal, although Chinese consumption demand has provided a degree of support. India’s physical demand during the peak festival season remains muted compared with previous years.

Traders will be eyeing remarks by at least six Fed officials at various events later in the day for clues about economic growth and the US central bank’s monetary policy. Chair Janet Yellen and Vice Chair Stanley Fischer would also be speaking.

Focus will also be on economic data. New US applications for unemployment benefits likely fell last week, almost reversing the prior week’s increase, suggesting the labour market recovery continued to gain momentum in early November.

Investor flows have not been encouraging for gold. Assets in SPDR Gold Trust, the top gold-backed exchange-traded fund, fell to 663.43 tonnes on Tuesday – the lowest since September 2008 when Lehman Brothers filed for bankruptcy, kicking off a global financial crisis.

Demand in China jumps as prices fall and markets panic over policymakers’ devaluation of the yuan, while Russia continues to ‘lead the pack’ for central bank purchases. Global gold demand hit its highest in more than two years in the third quarter as price drop in July boosted the buying of jewellery, coins and bars, the World Gold Council said on Thursday.

Overall demand reached 1,121 tonnes in the last quarter, up 8 per cent year-on-year to its highest since the second quarter of 2013. The rise was tempered by increased outflows from bullion-backed exchange-traded funds, however.

Bar and coin buying more than tripled in the United States to a five-year high of 32.7 tonnes, and also rose 70 per cent in China and 35 per cent in Europe. That followed a more than 6 per cent slide in spot gold prices in July, their biggest monthly drop in two years.