Gold Below Three-Month High as Dollar Strength Offsets Haven Bid

Gold traded below the highest level in more than three months as the dollar strengthened amid the outlook for higher U.S. borrowing costs, countering haven demand fueled by tension in Ukraine and Gaza.

Bullion for immediate delivery traded $1,312.60 an ounce by 11:36 a.m. in Singapore from $1,312.49 yesterday, according to Bloomberg generic pricing. The metal has retreated from $1,345.17 on July 10, the highest since March 19, and last week capped the first weekly decline in seven.

Gold sank 28 percent last year to end a 12-year rally on expectations the Federal Reserve will scale back stimulus as the economy improved. U.S. and European leaders pressed their message that Russian President Vladimir Putin risks isolating himself on the world stage after a Malaysianpassenger jet was downed over Ukraine by a missile believed to be supplied by his country. U.S. Secretary of State John Kerry arrived in Cairo seeking to mediate a truce to end the fighting in Gaza.

“Improving U.S. economic data is positive for the dollar which in turn weighs on gold,” said Lv Jie, an analyst at Cinda Futures Co., a unit of one of four funds in China created to buy bad debt from banks. “While gold may get some support from unrest around the world, the longer term downtrend is intact because of the expectations for higher U.S. interest rates.”

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major counterparts, traded near the highest level in a month before data today that may show U.S. inflation held at the fastest pace since October 2012, supporting the case for the Fed to tighten monetary policy.

Gold for December delivery slid 0.1 percent to $1,314.50 an ounce on the Comex in New York. Holdings in the SPDR Gold Trust, the largest bullion-backed exchange-traded product, fell 0.2 percent yesterday, data on the company’s website showed.

Silver for immediate delivery traded at $20.9414 an ounce from $20.9242 yesterday. Spot platinum decreased 0.2 percent $1,487.88 an ounce, and palladium lost 0.5 percent to $871 an ounce.