Gold Extends Rout as Dollar Strengthens

By Tatyana Shumsky 

        Gold tumbled near a 5 1/2 -year low on Friday, while silver closed in on a six-year low, as investors resumed selling amid a stronger dollar and expectations for tighter U.S. monetary policy.
        The most actively traded gold contract, for August delivery, fell $8.60, or 0.8%, to settle at $1,085.50 a troy ounce on the Comex division of the New York Mercantile Exchange. This was the lowest close since Feb. 10, 2010.
        Investors have been unloading their gold holdings after Federal Reserve Chairwoman Janet Yellen last week reiterated the central bank's plan to raise borrowing costs this year. Gold has benefited from the Fed's loose monetary policies because it doesn't pay interest and has an easier time competing with yield-bearing assets such as Treasury bonds when rates are pinned at zero. But now that the U.S. central bank appears closer to raising rates, many investors are shedding gold in favor of assets that would benefit from the shift.
        "Gold has continued to see aggressive liquidation," said Leon Westgate, metals analyst with ICBC Standard Bank PLC in London.
        Friday's losses were sparked by a stronger dollar, which advanced against other major currencies. Gold is traded in dollars and becomes more expensive for buyers using other currencies when the dollar rallies.
        Silver prices followed gold's cue, drawing closer to a six-year low. Silver often moves in the same direction as gold, and many investors who can't afford gold's price tag buy silver instead.
        Comex silver for September delivery fell 1.5% to $14.488 a troy ounce, marking the lowest close since Aug. 27, 2009.
        Write to Tatyana Shumsky at tatyana.shumsky@wsj.com
        (END) Dow Jones Newswires

        July 24, 2015 16:12 ET (20:12 GMT)

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