- Daniel Briesemann, analyst at Commerzbank
Gold declined for a third consecutive day, heading for a weekly drop amid expectations sharp fall in oil prices to the lowest level in four years raised prospects of cooling inflationary pressures, thus curtailing the metal's appeal as a hedge. On top of that, strength in the US Dollar as well as fresh outflows from bullion-backed funds including SPDR Gold shares, where holdings shrank 2.1 tonnes to 718.82 tonnes, reaching near six-year low, added to the downside pressure on gold. Traders also remain cautious ahead of this weekend's referendum in Switzerland on central bank's gold assets. Five million Swiss voters will decide whether the Swiss National Bank has to repatriate all its gold from vaults in the UK and Canada, where there are around 30% of Swiss gold reserves, and make sure that at least 20% of its assets are held in gold. The central bank may also be prohibited from selling any of its gold reserves.
At the moment of writing gold for immediate delivery traded at $1185.15 an ounce, with the Friday session's low at $1,181.67. The yellow metal fell 1.6% during the week, extending losses from $1,207.93 on November 21, the highest level in three weeks. Gold is set for a second annual decline, partly due to the fact that the Fed winded down its asset-purchase programme, which fuelled to ignite inflation amid sharp drop in energy prices.
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