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LONDON — Gold held near nine-month lows yesterday, weighed down by broad-based strength in the dollar on growing expectations that the US Federal Reserve is set to tighten monetary policy before other major central banks. Other precious metals also languished, with platinum the biggest faller, sliding to a five-year low at $1 256 30 an ounce early in the session.

Spot gold was at $1 209,20/oz at 9.27am GMT, little changed from late Tuesday, after earlier slipping to within 10c of the previous day’s nine-month low at $1 204,40.
US gold futures for December delivery were down $1,90/oz at $1 290,70.

“The weight of selling is such that I still see lower prices,” Societe Generale analyst Robin Bhar said.
“We have the stronger dollar and investor disinterest, and if we drop below $1 200 or $1 180, you’ll get the short sellers moving in because momentum will be accelerating.
“It’s difficult to see how things are going to reverse — there’s an old market saying, don’t catch a falling knife.”

The dollar rose above ¥110 for the first time in six years and held near a two-year peak against the euro yesterday, as investors added to bets that US data will drive the Fed to tighten policy.

A stronger dollar typically pressures assets priced in the US currency, such as commodities. Tightening monetary policy and the prospect of higher interest rates also raise the opportunity cost of holding non-yielding precious metals.

Traders are awaiting today’s European Central Bank meeting and key US payrolls data tomorrow for further clues on the direction of monetary policy. Yesterday’s US ADP jobs data will be closely eyed ahead of that, analysts say.

Chinese markets close for golden week
Reflecting waning investor sentiment, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, fell 2.39-metric-tonnes on Tuesday to 769.86-tonnes, the lowest since December 2008.

Markets in top bullion buyer China are closed for a week from yesterday for the National Day holiday, weakening support for gold during Asian trading hours and potentially accelerating a fall below $1 200.

Investors were also watching the political unrest in Hong Kong for its effect on equities and possible safe-haven bids for gold.
Thousands of pro-democracy protesters thronged the streets of Hong Kong yesterday, ratcheting up pressure on the pro-Beijing government.

Among other precious metals, silver was up 0,5 percent at $17,02/oz, while spot palladium was down 0,9 percent at $761,72/oz.
Spot platinum was down 2,1 ounce at $1 267,74/oz by 9.27am GMT.

It tumbled 12,7 percent in the last quarter, taking little support from a five-month strike in major producer SA earlier this year.
“Our analysis of above-ground platinum and palladium inventory published in June last year indicates that this inventory is indeed high,” Standard Bank said in a note yesterday.
“While some of this inventory would have reduced due to the large deficits anticipated this year, levels remain high.

“As a result, on balance, the bias may lie towards having to wait longer before PGM (platinum group metals) prices move higher on a sustainable basis.” — Reuters.