Gold rallied from an eight-month low, snapping three days of losses, on speculation that reduced prices may spur purchases before the Federal Reserve begins a two-day policy meeting.
Bullion for immediate delivery rose as much as 0.4 percent to $1,235.07 an ounce and traded at $1,233.67 by 11:58 a.m. in Singapore, according to Bloomberg generic pricing. The metal dropped earlier to $1,225.67, the lowest since Jan. 9. The 14-day relative-strength index held below the level of 30 for a third day today, signaling that prices may be poised to rebound.
Gold is heading for the first quarterly loss this year as the Bloomberg Dollar Spot Index climbed 4.7 percent since the end of June. The precious metal halted a 12-year rally in 2013 on expectations the Federal Reserve will reduce monthly asset purchases, which it has done six times. The Fed begins a two-day policy meeting tomorrow after data on Sept. 13 showed retail sales rose in August by the most in four months.
“While some buying interest may emerge at lower levels, gold continues to be under pressure from the dollar’s strength,” said Yang Xi, a Hangzhou, China-based analyst at Yongan Futures Co. “The possibility of the Fed raising interest rates sooner is high, and investors will be closely watching the meeting this week.”
China’s industrial output rose at the weakest pace since the global financial crisis, Sept. 13 data show, adding to concern that bullion demand may slow in the largest user as the economy loses momentum. Volumes for the benchmark spot contract in Shanghai retreated to a one-week low on Sept. 12. In India, the second-biggest user, imports may drop below 350 metric tons in the second half of the year as curbs continue, according to Edelweiss Financial Services Ltd.
Gold for December delivery increased 0.2 percent to $1,234.30 an ounce on the Comex in New York, after earlier falling to $1,226.30, the lowest for a most-active contract since Jan. 9. Investors reduced bullish bets on the metal for a fourth straight week to 71,376 contracts, the lowest since June, Commodity Futures Trading Commission data show. Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, last week snapped two weeks of contraction.
Spot silver rose 0.2 percent to $18.6702 an ounce after prices declined on Sept. 12 to $18.4675, the lowest since June 2013. Platinum was at $1,369.81 an ounce from $1,371.63 on Sept. 12, when prices retreated to $1,355.88, the lowest this year. Palladium climbed 0.5 percent to $841.65 an ounce after the metal dropped on Sept. 12 to $821.35, the lowest since June.