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PRECIOUS-Gold falls over 1 percent on stronger dollar, Fed outlook
June 24, 2013 / 3:37 AM / 4 years ago

PRECIOUS-Gold falls over 1 percent on stronger dollar, Fed outlook

* Gold extends last week's 7 pct decline
    * SPDR holdings touch new 4-year lows
    * Slow physical demand in India, China
    * Dollar hits two-and-a-half week high 

 (Adds comments, updates prices)
    By A. Ananthalakshmi
    SINGAPORE, June 24 (Reuters) - Gold fell over 1 percent on
Monday, extending last week's 7 percent decline, hurt by a
stronger dollar amid worries over an early end to the U.S.
Federal Reserve's stimulus programme.
    Gold for immediate delivery was trading near three-year
lows. Even though stocks underperformed, investors shunned
gold's usual appeal as a safe-haven asset, while physical demand
in India and China was muted.
    "The market is very bearish at the moment and we continue to
see more liquidation," said a trader in Hong Kong. "We can see
some physical buying interest but not enough to support prices."
    The most recent sell-off in gold, down 24 percent this year,
began last week when the U.S. Fed held a policy meeting to
consider scaling back its $85 billion monthly bond
purchases. 
    Gold was also hurt as interest rates for short-term funds in
China spiked to extraordinary levels last week, after big
commercial banks held back on lending in the interbank market.
    "The main problem for gold is the current lack of investment
interest," Credit Suisse analysts wrote in a note. "The $1,300
mark is a key level to watch and a sustained break to the
downside would worsen the technical picture."
    Spot gold opened near $1,300 in early Asian trading
but had lost 1.3 percent to $1,280.55 an ounce by 0648 GMT. Last
week, the metal recorded its worst weekly performance since
September 2011, falling to a near-three year low of $1,268.89.
    Comex gold fell about $12 to $1,279.70.
    
    SPDR AT NEW 4-YEAR LOWS
    Hedge funds and money managers slashed their bullish bets in
gold futures and options for a second consecutive week to the
lowest level in a month, a report by the Commodity Futures
Trading Commission showed on Friday. 
    Holdings in SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, fell a further 0.54 percent to
989.94 tonnes on Friday - the lowest in over four years.
 
    "Investment demand is not recovering, it's looking very
bleak. I think gold is going straight to $1,150," said Dominic
Schnider of UBS Wealth Management in Singapore.
    Physical demand in the top two gold consumers India and
China was muted, unlike the mid-April sell-off in gold that
prompted a frenetic rush for the metal, pushing up premiums and
tightening supplies.
    Indian demand has been hurt by new government rules on
financing and imports, as well as a weak rupee. 
    
  Precious metals prices 0648 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1280.55  -16.20   -1.25    -23.53
  Spot Silver        19.56   -0.52   -2.59    -35.40
  Spot Platinum    1349.75  -25.75   -1.87    -12.07
  Spot Palladium    662.47  -10.53   -1.56     -4.27
  COMEX GOLD AUG3  1279.70  -12.30   -0.95    -23.64        32063
  COMEX SILVER JUL3  0.20    0.00   -2.30    -99.35        10013
  Euro/Dollar       1.3103
  Dollar/Yen         98.44
 
  COMEX gold and silver contracts show the most active months
 
 (Reporting by A. Ananthalakshmi; Editing by Joseph Radford and
Tom Hogue)

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