Gold fell to its lowest level in four weeks on Monday, extending a sell-off into a fourth straight session as investors feared the Federal Reserve would hike US interest rates this year. The technical picture for gold has deteriorated, with traders warning of further price drops. Physical demand and investor flows have also not supported the metal.
Spot gold fell to $1,134.60 an ounce, its lowest since October 5, early on Monday before recovering to trade at $1,141.50 by 0642 GMT. Gold had rallied last month on speculation that the softness in the global economy could prompt the Fed to delay the rate hike to next year. But the US central bank's hawkish tone last week triggered a sell-off in bullion.
Technical selling and liquidation of long positions were sending prices lower, according to HSBC analyst James Steel. "Gold probably needs moderately better emerging market import demand if it is to sustain a rally. In the near term, the market also needs a respite from investor liquidations if prices are to stabilise," Steel said.
Asian gold demand saw some uptick towards the end of last week, as lower prices attracted buyers. But local premiums remained largely unmoved, a sign that demand has not picked up in a significant way, dealers said. Demand outside of Asia also remained soft. US Mint American Eagle gold coin sales slumped 73 percent in October. Investors were seen reducing their gold exposure. Assets in SPDR Gold Trust, the top gold-backed exchange-traded fund, fell 0.3 percent to 692.26 tonnes on Friday. Speculators trimmed a bullish bet in gold from an 8-1/2-month high in the week ended October 27, while they boosted a net long stance in silver to the highest level on record.
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