Gold and silver extended their losing streak to a fourth session on Monday to trade near their lowest in more than four years as a stronger U.S. dollar fuelled more selling and further declines were seen.
Precious metals took a beating on Friday after the Bank of Japan’s surprise decision to boost its already huge bond-buying stimulus prompted the yen to fall to a seven-year low against the dollar.
On Monday, the dollar hit a four-year peak against a basket of major currencies, further hurting bullion’s appeal as a hedge.
“It’s pretty hard to find anything bullish on gold at the moment,” said ANZ analyst Victor Thianpiriya, adding that currency movements, weak physical demand and fund outflows were all taking a toll on prices.
“The next support for gold is around $1,155-60 but not much support below that on the charts. If we don’t bounce back soon above $1,180, we are looking at that as a big resistance level.”
Spot gold dropped as much as 1 percent to $1,161.70 an ounce, before recovering to trade at $1,171.06 by 0720 GMT, down 0.2 percent.
It fell to $1,161.25 on Friday, the lowest since July 2010, before closing down 2 percent.
Spot silver fell to $15.72 an ounce, its lowest since February 2010. Platinum was trading near its lowest in a month. BELOW $1,000?
The $1,180 level – which gold broke through on Friday – was seen as a significant one for bullion, with chartists now eyeing prices below $1,000. The last time gold traded below that level was in October 2009.
A stronger greenback makes gold more expensive for holders of other currencies.
The prospect of higher interest rates in the United States has also hurt gold recently along with strong economic data. Gold is a non-interest-bearing asset and is often seen as a safe-haven asset.
Outflows from SPDR Gold Trust – the world’s largest gold-backed exchange-traded fund – accelerated in October, with holdings of the fund now at a six-year low.
Hedge funds and money managers cut their bullish long position in gold in the week up to Oct. 28, the Commodity Futures Trading Commission said on Friday.
“We suspect that we will likely be heading lower from here given that a number of bearish variables seem to be converging on gold all at once,” said INTL FCStone analyst Edward Meir.
Gold failed to find support from the physical markets in top consuming region Asia.
In China, the world’s biggest buyer of gold, local prices had slipped to a discount to the global benchmark from premiums last week – an indication of weak buying interest.
Gold stocks in Australia, the world’s no. 2 producer, also took a hit following the drop in gold prices.
Australia’s largest producer, Newcrest Mining Ltd, dropped nearly 8 percent, while St Barbara Mines lost more than 4 percent and Evolution Mining was down almost 12 percent.Precious metals prices :-
0720 GMT Metal
Spot Gold 1171.06 -2.86 -0.24
Spot Silver 15.99 -0.15 -0.93
Spot Platinum 1231.49 2.99 +0.24
Spot Palladium 793.72 5.52 +0.70
COMEX GOLD DEC4 1170.80 -0.80 -0.07
COMEX SILVER DEC4 0.16 0.00 -0.69
COMEX gold and silver contracts show the most active months