“So when investors are confident, they sell gold; when they’re anxious, they don’t buy it. A strong USA dollar with all this talk of interest-rate hikes likely contributing to gold’s seeming change of purpose of late with the three-month downtrend intact”.
Gold for August delivery on the Comex division of the New York Mercantile Exchange fell $12.00 to close at $1,131.90 per ounce, the lowest level since April 2010 and the sixth consecutive session of declines. Gold prices are likely to pull back in response to higher interest rates as the precious metal, which doesn’t pay interest or dividends, will struggle to compete with yield-bearing assets like Treasury bonds when rates climb.
Meanwhile, progress toward completing a bailout deal for Greece robbed gold of haven demand.
“We remain nervous about gold and would not be surprised to see a rather sizable, stop-induced fall to take place if and when we significantly pierce the $1,141 support on the next downswing”, INTL FCStone analyst Edward Meir said.
On Friday morning, gold fell more than 1% to as low as $US1,129.80 an ounce, the lowest since 2010. The upbeat economic reports keep the Fed on the path to higher interest rates, a view Fed Chairwoman Janet Yellen reiterated in her testimony to Congress earlier this week.
Platinum hit its lowest since February 2009 at $US1,000.25 an ounce, hurt by perceptions of plentiful supply. There was more evidence on Thursday of an improving labour market, with initial claims for USA state unemployment benefits dropping in the week to July 11.
Top player Anglo American Platinum reported a 60 percent rise in refined equivalent production in the second quarter. Holdings in exchange-traded products backed by gold are near the smallest since 2009.
“While gold remains out of favour among investors, the potential return of Chinese buyers seeking an alternative to equities and real estate remains the key bullish wild card”, Julius Baer said in a note.
Reflecting weak demand, India’s gold imports dropped 37 percent in June from a year ago to $1.96 billion.