“A combination of factors that include low inflation, modest wage growth, low interest rates and a strong dollar don’t favor gold at this time”, John Stoltzfus, chief investment strategist at Oppenheimer.
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China said on Friday its gold reserves were up 57 percent at 1,658 tonnes at the end of June from the last time it adjusted its reserve figures more than six years ago.
Market experts said the gold sell-off had seen thirty times as much metal traded in Shanghai as usual, sending the price crashing through “stops” put in place by investors to limit losses on their positions, and triggering more automatic selling.
The country is availing of the current low price of gold to lessen its dependence on the U.S. dollar as its key foreign exchange reserve The price of gold fell by 2.3 percent after the Chinese central bank’s announcement.
But the rise was below analyst expectations.
Gold prices were hit by speculative short selling in the futures market as fears of a Grexit faded away.
Evolution mining was down over 13% in early trade, while Regis Resources, Northern Star Resourcs and Newcrest Mining were all lower by over 8%.
The sharp decline in gold prices is being driven in large part by an improving USA economy.
Gold prices are continuing to spiral down without check.
That helped the dollar up to 124.11 yen, near its highest in around three weeks, while the dollar index of 97.991 is on ground last visited in April.
In a speech last spring, Janet Yellen confirmed that rate increases would be gradual: “After we begin raising the federal funds rate, I anticipate that the pace of normalisation is likely to be gradual(…) We have no intention of embarking on a pre-set course of increases in the federal funds rate after the initial increase”. “Some of the weakness may be due to disappointment that Chinese gold purchase was not bigger than what was announced on Friday”, said Ole Hansen, head of commodities strategy at Saxo Bank. A rate hike by the Fed will attract more inflows into US Treasuries as the yields are expected to go up, putting further pressure on commodity assets like gold. Overnight, gold was down almost $50 an ounce, which appears to have spooked some investors and forced them out of the market.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange were down 1.45 percent to $1,114.60 per troy ounce as of 10:26 BST. Thereby, according to the domestic market, the price of one biscuit of gold weighing of 100 grammes was valued at Rs.
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” class=”local_link” target=”_blank”>precious metals specialist at Natixis, said there is not a lot of positive news for the gold market”. Last week, MCX Gold contract was down 2 per cent and MCX Silver was down by nearly 4 per cent. The rupee weakened marginally against the dollar and closed at 63.47.
