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PRECIOUS-Gold drops from 3-month high on profit taking

Published 13/10/2015, 05:50 pm
© Reuters. PRECIOUS-Gold drops from 3-month high on profit taking
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* Gold down nearly 1 pct after hitting 3-month high on Monday

* Silver, platinum slide with gold (Updates prices)

By A. Ananthalakshmi

SINGAPORE, Oct 13 (Reuters) - Gold fell nearly 1 percent on Tuesday, retreating from a three-month high on profit-taking after a two-day rally triggered by expectations the Federal Reserve will not hike U.S. interest rates this year.

Spot gold XAU= fell 0.6 percent to $1,156.30 an ounce by 0643 GMT, after earlier dropping as much as 0.9 percent. The metal hit a three-month high of $1,169 in the previous session.

U.S. gold futures GCcv1 fell 1 percent to $1,152.

"It has been an impressive rally for the precious complex since the nonfarm payrolls 10 days ago, however it looks like the momentum is now starting to wane," said James Gardiner, a bullion trader with MKS Group.

"Overnight weakness in the oil price may also flow through the commodity complex and put additional pressure on precious metals and a bid on the dollar," he said. A stronger dollar would make gold expensive for holders of other currencies.

Bullion has gained $50 an ounce, or nearly 5 percent, since a surprisingly weak U.S. nonfarm payrolls report on Oct. 2. The data prompted the market to shift expectations of a Fed rate hike to 2016 and sell the dollar.

Gold, as a non-interest-paying asset, benefits from ultra-low interest rates.

However, comments from Fed officials signalling that the U.S. central bank was in no hurry to raise rates did not offset the profit taking on Tuesday.

The Fed should hold off on any rate hike until it is clear that a global slowdown, trouble in China and other international risks will not push the U.S. recovery off course, Fed Governor Lael Brainard said on Monday in one of the strongest defenses yet of a go-slow approach to rate policy. urn:newsml:reuters.com:*:nL1N12C0YA

The Fed refrained from hiking rates at its last meeting in September, citing concerns with the global economy and volatility in financial markets. It holds two more policy meetings in 2015: on Oct. 27-28, and then in December.

Among other precious metals, silver XAG= fell as much as 1.2 percent, after hitting a 3-1/2-month high of $16.10 last week.

Platinum XPT= fell 1 percent, dropping from a one-month high of $998.50 an ounce in the previous session. Palladium XPD= recovered from earlier losses to trade up 0.4 percent.

PRICES AT 0643 GMT

Metal

Last

Change Pct chg

Spot gold

1156.3

-7.3

-0.63 Spot silver

15.72

-0.1

-0.63 Spot platinum

982.75 -10.25

-1.03 Spot palladium

693

3

0.43 Comex gold

1155.9

-8.6

-0.74 Comex silver

15.73 -0.134

-0.84

COMEX gold and silver contracts show the most active months

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