Spot gold hit $1,088.05 an ounce – its weakest since March 2010 – shortly after the Shanghai Gold Exchange opened, possibly paving the way toward $1,000 per ounce.
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Meanwhile, a sUBSidence of eurozone worries last week, when both the Greek and German parliaments approved bailout terms for the debt-ridden country, has meant gold has not been needed as a safe haven. Gold had regained some ground as the selloff subsided, trading above the key $1,100 support level. Combined wagers for gold, silver, platinum and palladium fell 16 percent to 12,875, the lowest since the figures start in 2009. On Friday, China said its gold reserves are 57 per cent higher than they were six years ago.
“Markets have commenced the week with an unexpected start following a spectacular drop in gold during the Asian session that sent the yellow metal to a new milestone five-year low”, added analyst Jameel Ahmad at traders FXTM on Monday.
The slowdown in the Chinese economy, the world’s largest consumer of commodities, has also caused the gold price to fall steadily since 2011.
The bearish sentiment about gold has increased since last week after U.S Federal Reserve Chairwoman Janet Yellen said an increase in interest rates is very much in the cards this year, which is expected to strengthen the US dollar and depress gold as it is priced in the currency.
“We expect the gold prices to fall by another Rs 30-40 per gram (22 carat) and settle down there”, N. Anantha Padmanabhan, managing director of NAC Jewellers, told IANS in Chennai. And few investors see gold, an asset that throws off no income and costs money to hold, resuming its decadelong rally that ended in 2011.
According to Binary Tribune’s daily analysis, August gold’s central pivot point on the Comex stands at $1 135.3.
This measure bottomed out in 2011, when gold hit an all-time high above $1,700 an ounce.
China’s stock market plunged by almost a third at one stage earlier this month from a mid-June peak, wiping around $4 trillion from share values but recently they have pulled back amid a barrage of measures from regulators and buying by brokerages and mutual funds.
The United States dollar’s resurgence and higher bond yields have also reduced the demand for gold. The five gold contracts with the most volume on Friday will all pay out if prices drop further. The Bloomberg Dollar Spot Index rose 0.1 per cent in a fourth rising day.
This is despite the worldwide Monetary Fund (IMF) has urging the US Federal Reserve not to raise interest rates before next year, arguing that a 2015 rate hike risks adding to the growing economic and political threats to USA growth.
” class=”local_link” target=”_blank”>precious metals specialist at Natixis, said there is not a lot of positive news for the gold market”.
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The USA dollar index gained to 97.862, from 96.025 in the previous week.
