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Gold heads for longest retreat in five weeks on US rate view
[SINGAPORE] Gold headed for the longest stretch of declines in more than a month as the US dollar strengthened on speculation that the US economy could withstand an interest rate increase this year.
Bullion for immediate delivery traded at US$1,311.09 an ounce at 9:16am in Singapore, from US$1,311.60 on Monday, according to Bloomberg generic pricing. The metal is down for a sixth straight day, the longest losing streak since Aug 26.
The prospect of higher borrowing costs in the US continues to chip away at gold's 2016 rally. Federal Reserve Bank of Cleveland President Loretta Mester said the economy is ripe for a rate increase and repeated that the Fed's November meeting should be viewed as "live" for a policy decision.
On Monday, a report from the Institute for Supply Management showed US manufacturing expanded in September. The probability of a December rate hike - which would hurt gold because the metal doesn't pay interest - continues to rise and is now at 61 per cent.
"Gold prices have eased to start the week, as stronger-than-expected manufacturing data boosted the dollar, whilst Fed officials talked up the chances of a 2016 rate hike," Jordan Eliseo, chief economist at Australian Bullion Co, said in an e-mail.