Tuesday, August 4, 2020
Home > Economy > Gold price hits 6-week low

Gold price hits 6-week low

LONDON: Gold hit a six-week low, breaking below $1,300 an ounce for the first time since mid-February, as speculation that US rates would rise sooner than expected and easing tensions over Ukraine pushed prices down.
Selling accelerated as the metal broke through psychological support points on price charts at $1,300 an ounce, traders said, and its 200-day moving average at $1,296 an ounce. That took prices to their lowest since Feb. 13 at $1,291.36 an ounce.
Spot gold was down 0.5 percent at $1,296.45 an ounce at 1512 GMT, a 3 percent drop so far this week after the metal hit a six-month high at $1,391.76 earlier in March.
“The rally seemed a bit overdone in the sense that people were buying because of jitters over the US economy, based on data that was massively impacted by the weather conditions in January and February,” Citi analyst David Wilson said.
“The tapering extension at the last Federal Reserve meeting seemed to start the rot in gold, and refocus people’s minds on the fact that the US economy is actually doing pretty well.”
Data on Thursday showed US economic growth was a bit faster than previously estimated in the fourth quarter, displaying underlying strength that could bolster views that the slowdown in activity early in the year would be temporary.
Traders are watching data for clues as to when US monetary policy will normalize. Federal Reserve Chair Janet Yellen said recently that rates could start rising early next year, raising the opportunity cost of holding non-yielding bullion.
The metal is also losing support from the stand-off between Russia and the West over Ukraine, with European stocks well off the five-week lows they hit earlier this month on growing tension over Russia’s annexation of Crimea.
“There was also a geopolitical element to the latter stages of the upward price moves… those tensions are coming out of the price,” Wilson said.
US gold futures for April delivery were down $5.80 at $1,297.60.
Traders reported little interest from buyers of physical gold, who tend to return to the market strongly when prices fall, overnight in Asia. Prices around the $1,225-1,250 region may be needed to tempt buyers in major consumer China, they say.
“Physical demand remains far below levels that indicate this community considers current prices attractive,” UBS said in a note.
“This suggests that gold needs to descend further before it finds its price floor.”
Holdings in the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD fell 1.8 tons to 816.97 tons on Wednesday, after declining 2.70 tons in the previous session. That has cut its net inflow for the year to 18.8 tons.
Silver was down 0.1 percent at $19.70 an ounce.
Spot platinum was down 0.5 percent at $1,394.70 an ounce, while spot palladium was down 1.6 percent at $763.80 an ounce.
South Africa’s striking Association of Mineworkers and Construction Union (AMCU) is due to march to Impala Platinum’s offices on Thursday.
Impala is one of three mining companies, along with Lonmin and Anglo American Platinum hit by industrial action.
South Africa’s government mediator met with AMCU on Wednesday to restart talks aimed at ending a crippling platinum strike now entering its tenth week.