US MIDDAY: gold sinks to five-month low

Gold prices tumbled 3 percent to a five-month low on Friday, hit by a broad selloff in commodities as well as surging bond yields on speculation a splurge of US infrastructure spending could stoke inflation. Spot gold was down 3 percent at $1,222.38 an ounce by 3:04 p.m. EST (2004 GMT) after touching a session low of $1,219.40, the weakest since June 3.
The selloff put gold on track for its poorest weekly performance since June 2013, even after it rallied nearly 5 percent on Wednesday when results showed Republican Donald Trump was the US president-elect. US gold futures settled down 3.3 percent at $1,224.30.
Spot silver slid 6.5 percent to $17.34 an ounce, after tapping the weakest since Oct. 7 at $17.15. Platinum dropped 3.4 percent to $939.24, after touching $929.75, the lowest since Oct. 24. "There's a broad-based commodity selloff. Copper and nickel are getting hit and it has spilled over into precious," a European trader said.
Gold was already slightly weaker before base metals reversed and went into negative territory after a sizzling rally, while oil extended losses. "We're seeing a complete reassessment of various asset classes following the Trump win earlier this week. The combination of rising real yields and the stronger dollar is really hurting sentiment in gold," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
The dollar was on course for its best week in a year. The market is also betting on the Federal Reserve raising interest rates more quickly. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
Fed Vice Chair Stanley Fischer said on Friday that US economic growth prospects appear strong enough for the Fed to proceed with a gradual increase in interest rates. "Funds had increased their net longs to a huge degree over the last two weeks. That put the market in the situation where, if we started to come under some pressure and you got through some technical levels, you could see some selling," said Bill O'Neill, co-founder of LOGIC Advisors. Palladium shed 2.4 percent at $671.98, after rising to its highest since Oct. 5 at $697.90 earlier.