Gold at lowest since 2010 as US rate rise looms, China underwhelms

Gold retreated to the lowest level in more than five years, dropping for a sixth straight day.
Gold retreated to the lowest level in more than five years, dropping for a sixth straight day.PHOTO: REUTERS

SINGAPORE (BLOOMBERG) - Gold retreated to the lowest level in more than five years, dropping for a sixth straight day, on prospects for higher US interest rates and after China reported that it held less metal in its reserves than some analysts expected.

Bullion for immediate delivery declined as much as 0.4 per cent to US$1,129.59 an ounce, the lowest price since April 2010, and traded at US$1,132.21 at 7:05 a.m. in Singapore. Prices sank 2.5 per cent last week, the most since March.

With US Federal Reserve chair Janet Yellen repeating last week that she's ready to raise rates this year, investors are dumping precious metals that don't pay interest or offer returns like competing assets.

While China updated its bullion reserves on Friday for the first time since 2009, the 57 per cent increase to 1,658 metric tons was smaller than had been expected. The figures were disappointing, reflecting that China isn't adding as much as people thought, according to Natixis SA.

The Bloomberg Dollar Spot Index, which tracks the US currency versus 10 major peers, rose for a fourth week last week, adding 1.6 per cent to 1,208, a three-month high. The measure is about 1.2 per cent below a 10-year high in March. Gold typically trades counter to the greenback.