Gold
gave up most of its earlier gains as the meltdown across commodity
markets revived concerns over deflation, cutting the appeal of precious
metals as a store of value.
The
Bloomberg Commodity Index of 22 components had its biggest intraday
loss in a month, led by declines in wheat and oil. Investors dumped raw
materials after China surprised markets by devaluing its currency,
making imports of grains, energy and metals more expensive. Gold earlier
rose as China’s move spurred demand for haven assets, but as the losses
in commodities deepened, bullion pared its advance.
Gold
futures for December delivery gained 0.3 percent to settle at $1,107.70
an ounce at 1:42 p.m. on the Comex in New York, after touching
$1,119.10, the highest since July 20. Trading was about 30 percent
higher than the 100-day average for this time, data compiled by
Bloomberg show.
Prices
tumbled 6.5 percent in July, reaching a five-year low. Guidance from
the Federal Reserve that policy makers will probably raise interest
rates this year has cut demand for gold because it doesn’t pay interest,
unlike competing assets. The metal is heading for a third straight
annual loss amid low inflation, a stronger dollar and gains for U.S.
equities.
Also
on the Comex, silver futures for September delivery dropped 0.1 percent
to $15.284 an ounce. On the New York Mercantile Exchange, palladium
also fell, while platinum rose.
Source : Bloomberg
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