Azernews.Az

By Bloomberg

Gold headed for the biggest drop in four months and the dollar traded near a three-month high versus the euro as investors focused on the timeline for higher U.S. borrowing costs. Asian stocks fluctuated with Japanese markets closed for a holiday.

Gold for immediate delivery slid 2.3 percent by 10:23 a.m. in Hong Kong, trading at a five-year low after sliding 1 percent Friday. The greenback was steady at $1.0829 per euro after climbing the most since May versus the common currency last week. The Bloomberg Dollar Spot Index rose 0.1 percent in a fourth day of gains. The MSCI Asia Pacific excluding Japan Index fluctuated, while Standard & Poor’s 500 Index futures were little changed. Wheat led a slide in crops on signs of favorable U.S. weather.

Investors have soured on precious metals as the Federal Reserve gets closer to raising U.S. rates for the first time since 2006, sending the dollar higher and suppressing commodity prices. Commodity currencies are near multi-year lows, with New Zealand projected to join Canada in cutting borrowing costs this week amid sliding raw-materials prices. Banks in Greece reopen Monday following a three-week shutdown.

“The market is underpricing what the Fed is likely to deliver this year,” Ray Attrill, global co-head of currency strategy at National Australia Bank Ltd. in Sydney, said by phone. “Because commodity currencies and the euro are on a downtrend at the moment, to some extent the dollar’s stronger by default.”

China’s Inventory

Gold sank as much as 4.2 percent to the lowest level in more than five years. It fell for a sixth day on prospects for higher U.S. interest rates and after China said it held less metal in reserves than some analysts expected.

Bullion for immediate delivery fell as low as $1,086.18 an ounce, the lowest price since March 2010, before paring losses to $1,107.25. Prices sank 2.5 percent last week, the most since March. Platinum slid 3.2 percent, extending its decline to the lowest since 2009.

China said at the end of last week that it boosted bullion assets to about 1,658 metric tons, less than brokers at GoldCore Ltd. and Sharps Pixley Ltd. had expected. Holdings in the SPDR Gold Trust, the world’s largest exchange-traded gold fund, dropped 1.6 percent on Friday to the lowest since September 2008. Since peaking in December 2012, assets have contracted 49 percent.

Gold producers Newcrest Mining Ltd. and Zijin Mining Group Co. led declines on the MSCI Asia-Pacific equity gauge that excludes Japan on Monday. Newcrest tumbled 7.5 percent and Zijin Mining slumped 3.8 percent.

‘Bear Phase’

“The market is in one of its bear phases, where any news is bearish news,” said David Baker, Sydney-based managing partner at Baker Steel Capital Managers LLP, predicting that gold may drop as low as $1,050. “People had expected China’s holdings to be higher,” said Baker, who manages about $150 million and holds shares in gold miners.

Australia’s S&P/ASX 200 Index was little changed, weighed down by the slide among materials companies. The Hang Seng China Enterprises Index was little changed in Hong Kong, while the Shanghai Composite Index increased 1.2 percent.

The dollar strengthened against Asian emerging-market currencies, gaining at least 0.3 percent versus the South Korean won and the Malaysian ringgit.

The Bloomberg dollar gauge, which tracks the greenback against 10 major peers, jumped 1.6 percent last week as Greece accepted a bailout deal and mainland Chinese equities capped a second week of gains.