Gold declined for a sixth day and traded near the lowest level in more than five years on expectations that the Federal Reserve will soon raise U.S. interest rates, eclipsing an increase in demand for the metal following the terrorist attacks in France.
Bullion for immediate delivery retreated 0.4 percent to $1,078.07 an ounce by 1:42 p.m. in Singapore, according to Bloomberg generic pricing. On Monday, gold advanced 1.3 percent in the wake of the violence in Paris, before ending 0.1 percent lower.
Demand for haven assets faded over the course of the first trading day since Friday’s attacks, as the history of reactions to terror incidents around the world over the last 15 years show market moves becoming increasingly short-lived. Investors’ focus returned to the outlook for U.S. borrowing costs, and inflation figures set for release on Tuesday will provide additional clues on whether the Fed will tighten.
“The initial rise in gold prices on the back of safe-haven flows has since been almost entirely unwound,” Australia & New Zealand Banking Group Ltd. wrote in a note. “A Fed rate-rise still dominates the negative price outlook.”
Futures show a 66 percent chance the policy-setting Federal Open Market Committee will announce a rate increase after its Dec. 15-16 meeting, up from a 50 percent probability at the end of October.
Bullion of 99.99 percent purity fell as much as 1.5 percent to 222.07 yuan a gram on the Shanghai Gold Exchange, the biggest drop in a week. Spot silver was little changed, while platinum climbed and palladium lost 1.7 percent.