2014.09.3023:25:07UTC+00Gold drops to nine month low on strengthening dollar

Futures for gold fell to their lowest value since January with outlook over higher borrowing rates in the US spurring the dollar upward and decreasing demand for an inflation hedge.

Bullish wagers made on gold by money managers have declined for six consecutive weeks, making the longest losing streak in over years based on government data. Holdings in bullion backed exchange traded products around the world shrunk to the smallest in five years with the metal close to erasing all its gains for 2014.

Futures for gold with a delivery date in December fell by 0.6% to arrive at a price per ounce of $1,211.60 early afternoon in New York’s Comex. It earlier touched its lowest since January 2nd at $1,204.30. The precious metal has declined by 8.4% so far this quarter, its first losing three month period for the year.

Gold underwent a rally during the first half of the year due to geopolitical tensions rising up around the world, particularly in Ukraine and the Middle East.

Adrian Day Asset Management president Adrian Day says that, “It’s really been the dollar that probed gold lower since the beginning of July.” The US dollar rose to its highest four years today against a basket of 10 currencies to put it on track to record its largest gain in a quarter. The Federal Reserve increased its outlook for interest  rates on September 17, suggesting that its commitment to stabilize inflation.

Commodities research head Jeffrey Currie from Goldman Sachs Group Inc. claims that gold will continue to fall until it reached $1,050 per ounce by the end of the year.

Futures of silver with a delivery date in December fell by 2.9% for a price per ounce of $17.057 after hitting its lowest since March 2010 of $16.85. It has dropped by 19% this quarter.

Palladium for December also declined by 1.8% to $775.15 per ounce. It has lost 15% during this month. Platinum in January fell by 0.7% to $1,300.50 per ounce as part of its 12% loss this quarter.