Johannesburg - Gold retreated from the highest in seven weeks as investors sold on speculation the metal rose too far as they consider the timing of the first US interest rate increase since 2006.
Bullion for immediate delivery fell 0.8 percent to $1 155.01 an ounce by 11:12 a.m. in London, according to Bloomberg generic pricing. The metal rose for a second day on Monday, gaining to $1,169.09, the highest since a spike in prices on August 24.
“The move higher since the lows of August has seen gold make up quite a lot of ground,” Jonathan Butler, a precious metals strategist at Mitsubishi in London,. said by phone. “It has led to some profit-taking.”
Gold investors are also tracking comments from US central bankers to try to figure out when the Federal Reserve will start tightening.
Atlanta Fed chief Dennis Lockhart argued on Monday that the improving economy justified a move in 2015. Fed Governor Lael Brainard cautioned against raising rates prematurely and Chicago Fed president Charles Evans favored a delay to mid-2016.
“Anything that the Fed says that could shed some light on what they’re going to do with regards to interest rates and how it subsequently affects the dollar will be watched closely,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “We’re not expecting any action though, more rhetoric.”
The chances of a rate liftoff in December are below 40 percent, with odds rising to 59 percent for a move in March, futures data show.
Other precious metals followed gold lower. Silver declined 0.9 percent to $15.6985 an ounce, while platinum lost 1.7 percent, the most in two weeks, to $978.88 an ounce. Palladium sank 1.3 percent to $684.80 an ounce.
BLOOMBERG