Gold suffered its worst single-session setback in nearly two months on Monday, as the dollar gained in strength against major currencies after lira tumbled amid mounting worries about Turkey’s financial health.
After a massive fall on Friday, the lira weakened further Monday morning. Although it recovered some lost ground subsequently, worries about potential contagion from Turkey’s woes to other emerging markets continued to weigh on sentiment.
Also, with the U.S. economy doing fairly well and the Fed set to hike interest rates twice before the end of this year, the yellow metal has been struggling in recent weeks to force its way up any significantly.
Gold futures for December ended down $20.10, or 1.6%, at $1,198.90 an ounce, the lowest level since January 30.
Silver futures for September were down $0.290, or 1.90%, at $15,005 an ounce.
Copper futures were lower by $0.009, or 0.35%, at $2.733 per pound.
The dollar index rose to 14-month high at 96.39 today.
Turkey’s central bank took measures to boost the liquidity in the foreign exchange market to support the lira, by cutting lira reserve requirement ratios by 250 basis points for all maturity brackets and the same ratio for non-core FX liabilities by 400 basis points for the various maturities.
The bank also raised the maximum average maintenance facility for FX liabilities to 8% and said the euro can be used for the maintenance against Turkish lira reserves, in addition to the US dollar.