Gold slides to 11-week lows as U.S. manufacturing in August expanded at the fastest pace in three years, bolstering prospects for the economy and damping demand for the precious metals as a haven.
Gold has dropped this quarter on concern that the Federal Reserve is closer to raising interest rates. In August, holdings in exchange-traded products backed by the metal slumped for the fourth time in five months even as conflicts escalated in Ukraine and the Middle East.
Gold futures for December delivery dropped 1.7 percent to $1,265.20 an ounce at 11:41 a.m. on the Comex in New York, heading for the biggest decline for a most-active contract since July 14. Earlier, the price touched $1,263.10, the lowest since June 17.
Gold plunged 28 percent last year on expectations that U.S. monetary stimulus would slow. The Fed reduced monthly bond purchases to $25 billion on July 30 with the sixth consecutive cut of $10 billion since November. Chair Janet Yellen said Aug. 22 that if progress in labor markets “continues to be more rapid than anticipated,” interest rates may rise sooner than expected.
Silver futures for December delivery fell 1.7 percent to $19.16 an ounce. Earlier, the price touched $19.15, the lowest since June 12.
On the New York Mercantile Exchange, palladium futures for December delivery dropped 2.7 percent to $885.60 an ounce, heading for the biggest decline since June 12. Earlier, the price touched $913, the highest since February 2001.
Through Aug. 29, the price jumped 27 percent this year. Russia is the top producer, followed by South Africa.
The European Union is considering expanding sanctions against Russia amid the Ukraine conflict. President Vladimir Putin has retaliated against previous penalties by banning imports of some food products, while palladium trade hasn’t been affected.
Output in South Africa dropped following a five-month mine strike that ended in June.
Platinum futures for October delivery fell 0.9 percent to $1,412.20 an ounce.