Nov. 1 (Bloomberg) -- Gold futures fell to a two-week low as U.S. manufacturing in October increased at a faster pace than forecast, boosting the dollar and enhancing prospects for the Federal Reserve to taper monetary stimulus.
The Institute for Supply Management said today that its factory index rose to the highest since April 2011. The gauge climbed to 56.4 from 56.2 in September. The median forecast in a Bloomberg survey of economists was 55. The greenback headed for the longest rally since mid-May against a basket of 10 currencies, eroding gold’s appeal as an alternative investment.
“People are now really getting worried about tapering,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “The ISM number today is a big nail in the coffin.”
Gold futures for December delivery declined 0.8 percent to settle at $1,313.20 an ounce at 1:49 p.m. on the Comex in New York. Earlier, the price touched $1,305.60, the lowest for a most-active contract since Oct. 17. The metal dropped 2.9 percent this week.
This year, gold has tumbled 22 percent, heading for the first annual decline since 2000. Some investors lost faith in the metal as a store a value amid a U.S. equity rally to a record and tame inflation.
Silver futures for delivery in December fell 0.1 percent to $21.837 an ounce. Earlier, the price touched $21.705, the lowest since Oct. 17. The metal dropped 3.5 percent this week.
Yesterday, gold had the biggest loss in two weeks and silver fell 4.9 percent, the most since Sept. 20, after the Fed said that the economy shows signs of “underlying strength.”
On the New York Mercantile Exchange, platinum futures for January delivery advanced 0.2 percent to $1,451.90 an ounce. The metal climbed 2.5 percent last month. Lonmin Plc, Impala Platinum Holdings Ltd. and Anglo American Platinum Ltd., the world’s top producers, are at risk of simultaneous strikes as unions fail to wage accords.
Palladium futures for December delivery rose 0.2 percent to $738.25 an ounce on the Nymex.
--With assistance from Michelle Jamrisko in Washington and Paul Burkhardt in Johannesburg. Editors: Patrick McKiernan, Thomas Galatola