Gold futures slide further amid weak global cues

Monday marked the sixth straight day of decline for gold, which took a hit last week after Federal Reserve Chair Janet Yellen said the U.S. central bank is on course to raise interest rates this year if the U.S. economy expands as expected.

Despite the uptick, more losses expected in the coming months following Monday’s “bear raid” when sellers dumped an estimated 33 tonnes in just two minutes.

Gold suffered most of its losses on Monday in a matter of minutes during early morning hours in Asia, as a bout of technical selling kicked in after prices broke below key support levels, triggering fresh sell orders amid bearish chart signals.

“Investors will likely liquidate gold positions when U.S. dollar and U.S. rates go up in an environment where inflation expectations remain muted and investor sentiment is constructive”, said ABN Ambro analyst Georgette Boele in a note.

Gold’s sharp slide has also been exacerbated by data out of China last week that showed Beijing has been buying less gold than analysts had forecast.

Goldman Sachs Group’s Jeffrey Currie told Bloomberg that the worst is yet to come for gold and that prices could fall below $1,000 an ounce for the first time since 2009. Despite the tonnage increase, gold now accounts for 1.65% of China’s total foreign exchange reserves, against 1.8% in June 2009, said Reuters.

Experts give another reason for the fall of gold quotations: the market is expecting the US Federal Reserve System to cut interest rates.

At its Monday low, it had erased half the gains from a 12-year bull rally that ran from 1999 to a record high near $2,000 an ounce in September 2011.

As world gold prices plunge to a five year low, a local expert says many Kiwi investors will hold out – and not sell until prices lift again. For a time, gold was selling at less than 1,100 dollars an ounce on Asian markets.

Other commodities have also fallen, with the price of platinum down 5 per cent – its weakest level since the global financial crisis. Mr Thianpiriya is tipping US$1,125.

Spot gold stood at $1,104.50 per ounce at 1348 GMT on Tuesday, with another 29 tonnes worth about $1.02-billion changing hands on the Shanghai exchange during the day.

Gold prices are now six percent lower compared to prices one year ago.

Investors are shifting their money out of gold and into currencies so they can make money as prices rise.

“Anyone who trades gold knows not to put any volume into the market at this time, unless they deliberately want to move it in a big way”.