2014.12.0222:59:26UTC+00Gold holds below lowest in five weeks on weak demand behind surging dollar

Gold traded just under its highest in five weeks with the strength of the dollar dampening demand for a value store after a policy maker in the US said that the Federal Reserve may reconsider its previous intent to hold interest rates at their current low for an extended period of time.

Spot gold alternated between gains and losses of at least 0.2% and was trading at a price per ounce of $1,195.88 mid morning Singapore time, down from yesterday’s $1,198.28 which it reached after a 1.1% decline, based on generic pricing from Bloomberg. The precious metal dropped to its lowest in three weeks of $1,142.88 on December 1st before it rebounded to its highest value since October 30th of $1,221.43 behind oil prices.

The Bloomberg Dollar Spot Index traded just below its highest level since 2009 with incoming data on the labor market expected to show a tenth straight month of an increase of at least 200,000 jobs. Vice Chairman of the US central bank, Stanley Fischer, said that the Fed is nearing taking back its language of “considerable time” regarding interest rates with the US economy benefiting from crude oil falling into a bear market.

Research head Mark To from Hong Kong’s Wing Fung Financial Group says that, “The expectation for the U.S. economic recovery to continue, and the lower inflation outlook because of falling oil prices will keep precious metals under pressure. Investors will keep an eye out for the U.S. payroll report and the ECB meeting.”

Gold has lost 0.5% so far this year after dropping by 28% in 2013. Both the Bank of England and the European Central Bank are expected to hold their respective policy meetings tomorrow, ahead of the Federal Open Market Committee’s next gathering on December 16-17.

Futures for gold with a delivery date in February declined for the second day in a row by 0.2% for a price per ounce of $1,196.80 in New York’s Comex.

Spot silver retreated by 0.3% for a price per ounce of $16.4279 after hitting its lowest in five years on December 1st at $14.4235. Platinum was slightly down from $1,216.50 per ounce to $1,215.17, while palladium increased by 0.3% to a price per ounce of $804.50.