Gold dropped for the sixth consecutive session on Thursday, hitting its lowest level in four weeks, on a stronger dollar and battered investor sentiment. Rallying stocks have also hurt bullion's appeal as an alternative investment this year, leading funds to generally liquidate their gold positions.
Gold fell as much as 1.6 percent to a low of $1,369.29 an ounce in earlier trade. It pared some losses but remained down 1.2 percent at $1,375.46 at 1118 GMT. US gold for June delivery was down 1.5 percent at $1,374.30 an ounce, having hit a low of $1,368. Traders said the fall below the psychologically significant $1,400 level in the previous session triggered heavy selling and that the metal might re-test two-year lows of $1,321.35 hit on April 16, when it recorded the worst daily loss for 30 years.
A sixth consecutive daily fall for bullion would be its longest run of losses since March 2009. It has fallen about 16 percent in 2013 after gaining for the past 12 years. "It is possible that we will see further selling. This fall is reminiscent of what we saw about a month ago during a sort of flash crash in gold," Mitsubishi analyst Jonathan Butler said.
"Investors appear to be tired of gold as a safe haven as they anticipate the end of those loose monetary policies, possibly by the end of this year or maybe early next year, while there also seems to be a return of risk appetite." The dollar was near a six-week high against the euro and a 4-1/2 year peak against the yen on prospects for more monetary easing in the euro zone and reduced asset buying in the United States, which would undermine the argument for holding gold as a hedge against inflation.
A stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies. The market is now turning its attention towards US inflation data, later in the day, as well as the country's weekly jobless claims. Gold investment nearly halved in the first quarter as a brighter view of the US economy prompted investors in the West to favour assets such as stocks over bullion, the World Gold Council said on Thursday.
Soros Fund Management LLC joined funds including Northern Trust and BlackRock in lowering its investment in the SPDR Gold Trust, the world's largest gold-backed ETF, in the first three months of the year, a SEC filing showed. Holdings in the SPDR fund fell 0.43 percent to 1,047.14 tonnes on Wednesday, the lowest since March 2009. However, lower gold prices have attracted physical buying in China. The world's second-largest consumer after India bought a large amount of gold on Thursday.
In other precious metals, silver fell 1.1 percent to $22.32 an ounce, having earlier touched its lowest level since April 16 at $22.09. The metal has fallen 6.7 percent so far this week, and is set for its worst weekly performance in a month. Platinum fell 1.1 percent to $1,469.74 an ounce, but its premium over gold reached its highest level since August 2011 as South Africa's production worries continue. Palladium dropped 0.6 percent to $720.25 an ounce.
Comments
Comments are closed.