LONDON: Gold fell on Friday, heading for a third straight weekly drop, as the dollar was buoyed by a decline in US jobless claims that reinforced the chance of a faster-than-expected tightening in US monetary policy.

Prices had fallen to their lowest since early January at $1,216.01 on Thursday, under pressure from the Federal Reserve’s indication that it could raise borrowing costs more rapidly than expected when it starts moving.

Spot gold was down 0.5 per cent at $1,219.40 an ounce by 1421 GMT, on track for a 0.7pc drop for the week. US gold futures slid 0.5pc to $1,220.40.

Physical demand in Asia has picked up slightly with the lower prices, providing some support. Premiums in top buyer China held steady at $5-$6 an ounce, compared with about $4 earlier in the week.

“Physical demand is starting to pick up with lower prices but it’s not aggressive yet. We may have a bit more room on the downside towards $1,200/$1,180 and that should see buying increase,” MKS Nabavi said.

On the newly launched international Shanghai Gold Exchange the most traded contract rose nearly 6pc.

Among other precious metals, silver was also headed for a weekly decline. The metal was down 1.1pc at $18.26 an ounce, having touched its lowest since June 2013 in the previous session.

Published in Dawn, September 20th, 2014