Investing.com – Gold prices fell to seven week lows amid a dip in safe-haven demand after manufacturing data topped expectations pushing yields and the dollar to session highs.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange fell by $8.51, or 0.65%, to $1,276.50 a troy ounce.
Gold futures made a weak start to the month added to losses from the previous week as investors continued unwind their bullish bets on gold after upbeat manufacturing data pointed to underlying strength in the U.S. economy.
The Institute for Supply Management (ISM) said its index of national factory activity surged to a reading of 60.8 last month, the highest reading since May 2004, from 58.8 in August.
That beat economists’ expectations of a reading of 58.
The drop in gold prices comes against the backdrop of a dip in bullish bets on the yellow metal as investors ditch the safe-haven trade amid renewed tax reform hopes and a year-end rate hike despite an uptick in Eurozone geopolitical uncertainty.
Net bullish bets on gold fell to 212,600, according to a report from the Commodity Futures Trading Commission (CFTC) on Friday.
Preliminary results released by Spain's Catalonia region government showed 90% of the 2.26 million Catalans who voted on Sunday voted in favour of independence, adding to Eurozone geopolitical uncertainty in the wake of the German election results a week ago.
“… investors are continuing to ignore geopolitical risks, as their insatiable appetite for risk continues,” said Fawad Razaqzada, technical analyst at Forex.com. “Dollar-denominated and safe haven gold has consequently fallen out of favor.”
Gold is sensitive to moves higher in both bond yields and the U.S. dollar – A stronger dollar makes gold more expensive for holders of foreign currency while a rise in U.S. rates, lift the opportunity cost of holding non-yielding assets such as bullion.
In other precious metal trade, silver futures fell 0.17% to $16.65 a troy ounce while platinum futures added 0.18% to $917.25.
Copper traded at $2.95, down 0.03% while natural gas fell by 3.66% to $2.90.