gold struggles near multi year

MANILA: Gold hovered near a 5-1/2-year low on Wednesday as the dollar strengthened after comments from a Federal Reserve official backed expectations that the U.S. central bank would hike interest rates as early as next month.Atlanta Federal Reserve President Dennis Lockhart has said it would take “significant deterioration” in the U.S. economy for him to not support a rate hike in September, according to the Wall Street Journal.Gold, an asset that does not earn interest, has taken a hit given rising risks of a US rate hike. The Fed looks intent on lifting rates this year for the first time since 2006 as the U.S. economy strengthens, particularly its labour market.Spot gold was flat at $1,086.90 an ounce by 0606 GMT. Bullion has stayed largely below $1,100 since breaching that key support level in a late July rout that pulled it to as low as $1,077, its weakest since February 2010.U.S. gold for delivery in December slipped 0.4 percent to $1,086.50 an ounce.”We suspect that we will see a steady grind lower across most commodity complexes, including gold, largely attributable to the strength of the dollar and poor technicals that will only encourage more funds to further increase their short side exposure,” INTL FCStone analyst Edward Meir said.In fresh evidence of a recovering U.S. economy, new orders for U.S. factory goods rebounded strongly in June. The dollar index rose to its highest since April against a basket of major currencies.Gold may languish below $1,100 as investors wait out Friday’s U.S. nonfarm payrolls, said MKS Group dealer Samuel Laughlin.Bullion could test $1,080 on Wednesday, he said, following Lockhart’s comments although some Chinese demand where onshore premium is around $2 an ounce over the global benchmark is providing some support.Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped further on Tuesday to 21.56 million ounces, the lowest since September 2008.Spot platinum and palladium wallowed near multi-year lows on a global glut and weak demand from the automotive sector.Platinum was unchanged at $951.60 an ounce, after sinking to $940.50 on Tuesday, its lowest since February 2009. Palladium gained 0.5 percent to $595.50 after hitting $586.33 overnight, its weakest since October 2012. Silver slipped 0.4 percent to $14.52 an ounce.