SINGAPORE: Gold and silver slumped to their lowest since 2010 on Friday, as robust US economic data and a stronger dollar pressured prices, with stop-loss orders accelerating the metals' decline.
Gold and silver were hit hard after the dollar rose to a near four-week high against a basket of major currencies on Friday. The greenback got a boost from strong US gross domestic product data and the Bank of Japan's surprise move to expand its massive monetary easing that weakened the yen.
The metals were already facing some heat after the US Federal Reserve earlier in the week largely dismissed financial market volatility, a slowdown in Europe and a weak inflation outlook as factors that might undercut progress towards its unemployment and inflation goals.
The hawkish comments and the strong economic data dulled gold's appeal as a hedge.
Spot gold slid over 2 percent to $1,168.66 an ounce - its lowest since July 2010. The metal's losses accelerated after the BOJ announcement sent the dollar index soaring to fresh session highs. US gold futures also tumbled.
There were big stop loss orders below $1,180.50 an ounce - the triple bottom for gold, said a Hong Kong-based precious metals trader. That combined with the strong movement in the dollar against the yen sent gold lower, he said.
The metal is on track for a 4.7 percent drop this week, the biggest decline since June 2013. It is also headed for a second straight monthly drop.
"We hold a bearish view on gold, considering a recovering US economy and expectations of higher rates," said Chen Min, a precious metals analyst at Jinrui Futures in Shenzhen. "In the long term, we believe gold is likely to break closer to $1,000."
Silver fell nearly 3 percent to $15.94 on Friday - its lowest since February 2010. It was poised for a fourth monthly drop in a row.
Reflecting bearish sentiment, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.16 percent to 741.20 tonnes on Thursday, a six-year low.
NO SUPPORT FROM PHYSICAL MARKETS
Gold failed to get any support from the Asian physical markets, a factor that could likely push it to further lows. Physical demand usually provides a floor to dropping prices.
Buyers in top consumer China failed to emerge despite the drop below $1,200.
Premiums on the Shanghai Gold Exchange - the main platform for physical trades in the country - slipped on Friday to less than $1 an ounce, occasionally dropping to a discount against the global benchmark.
Premiums ranged between $1 and $2 on Thursday.
The lower premiums underscore the soft appetite for gold in China after record consumption last year.
China's gold consumption tumbled 21.4 percent year-on-year in the first nine months of the year to 754.8 tonnes, the China Gold Association said in the statement on Friday.
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