NEW YORK—Gold extended its four-year low on Monday as the dollar advanced against other currencies and stocks hit record highs.
Gold for December delivery, the most active contract, fell $1.80, or 0.2%, to $1,169.80 a troy ounce on the Comex division of the New York Mercantile Exchange. This was the lowest settlement since July 29, 2010.
Gold prices continued to give way to the dollar, which climbed against other currencies amid expectations of stimulus by foreign central banks. Last week, the Bank of Japansurprised markets with plans to boost its bond-purchasing efforts. This week, the European Central Bank is due to meet, with investors hoping to see a more proactive stance from officials.
By contrast, the Federal Reserve concluded its bond-purchasing program last month and is drawing closer to raising interest rates.
The shifts in global monetary-policy trends have bolstered the dollar and weighed on gold. As the greenback strengthens, dollar-denominated gold becomes more expensive for buyers who use other currencies to fund their purchases. Moreover, gold doesn’t earn interest or dividends and has a tougher time competing with bonds and stocks when interest rates climb.
“With the interest-rate hike anticipated next year, there’s a fear that everyone will run to cash and so far, they are,” said John Payne, senior market analyst with Daniels Trading in Chicago. He added that gold has become one of the main casualties of this shift.
Fresh records in U.S. stocks further tarnished gold’s appeal.
A steady stock market also weighed on gold’s appeal to investors. The S&P 500 index touched an intraday record of 2024.46 and was recently up 0.2% at 2021.
While some investors buy gold on the belief it will hold its value better than other assets during periods of economic upheaval, they tend to shed the precious metal in favor of riskier investments such as stocks when the economic outlook brightens.
Meanwhile, platinum and palladium prices got a shot in the arm from stronger U.S. car sales, with auto makers reporting company figures throughout the day. Edmunds forecasts U.S. car sales will rise 6.3% in October, though several car makers predicted stronger results.
While most investors are familiar with platinum and palladium’s use in jewelry, the white metals are also widely used in car-exhaust filters where they help break down pollutants.
Nymex palladium for December delivery rose $12.60, or 1.6%, to $804.40 a troy ounce, the highest settlement since Sept. 24.
Platinum for January delivery climbed $7.60, or 0.6%, to settle at $1,242.80 a troy ounce.
