Gold Falls for Third Session on U.S. Inflation, Housing Data

Aug 19, 2014 2:12 pm ET

Aug. 19 (Bloomberg) -- Gold futures fell for the third straight session as a U.S. inflation gauge showed price pressures remain limited and housing starts jumped, crimping demand for the precious metal as an alternate investment.

In July, the cost of living climbed at the slowest pace in five months, and beginning home construction jumped almost 16 percent, the highest in eight months, separate reports showed today. Last year, gold slumped the most in three decades amid a rally in equities and muted inflation.

The metal fell 3 percent last month on speculation that the Federal Reserve will raise interest rates as the U.s. economy gains traction. The central bank will release minutes of its July 29-30 policy meeting tomorrow, and Chair Janet Yellen is due to deliver a speech on Aug. 22 at an annual symposium in Jackson Hole, Wyoming.

“Today’s CPI number shows that inflation is not rising and you don’t need to hedge against inflation,” Blake Robben, a senior market strategist at Archer Financial Services in Chicago, said in a telephone interview. “Good economic data will give Fed the confidence to raise interest rates.”

Gold futures for December delivery dropped 0.2 percent to settle at $1,296.70 an ounce at 1:46 p.m. on the Comex in New York. On Aug. 15, the price touched $1,293, the lowest for a most-active contract since Aug. 6. Trading was 41 percent below the average for the past 100 days for this time, data compiled by Bloomberg show.

Haven Demand

The metal advanced 7.9 percent this year as violence in the Middle East and Ukraine boosted demand for a haven.

Silver futures for September delivery fell 1.1 percent to $19.412 an ounce on the Comex. Earlier, the price touched $19.365, the lowest since June 12.

On the New York Mercantile Exchange, palladium futures for September delivery fell 1.6 percent to $880.80 an ounce. Yesterday, the price reached $902.75, the highest since February 2001, amid a global supply deficit for the metal used mostly in pollution-control devices in cars.

Platinum futures for October delivery dropped 0.5 percent to $1,439.50 an ounce. The price fell for the fifth straight session, the longest slump since April 22.

--With assistance from Nicholas Larkin in London, Victoria Stilwell and Lorraine Woellert in Washington and Luzi Ann Javier in New York.