Gold prices fell on Wednesday for a seventh session in eight, reflecting sustained downward pressure on the metal days after its steepest drop in almost two years, with more losses seen ahead as the demand outlook dims.
A looming hike in US interest rates has dented gold’s appeal as an investment, encouraging more sellers in the market after Monday’s 4-per cent rout. Holdings in top gold fund SPDR Gold Trust dropped further, marking their lowest since 2008.
“The long-term downtrend is still in place and more people are selling,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
“We can’t see any bullish factor. Inflation is well contained and we don’t see a systemic crisis that might push people to buy gold.”
Spot gold fell 0.7 per cent to $1,093.60 an ounce by 0352 GMT, not far above Monday’s trough of $1,088.05 when bullion hit its lowest since March 2010 in a selloff exacerbated by huge volumes traded on the Shanghai Gold Exchange.
US gold for August delivery slipped 1 per cent to $1,092.60 an ounce, marking its 10th consecutive session of losses.
Physical demand has been sluggish despite this week’s steep price drop.
India is not rushing to pick up slack Chinese demand as would-be buyers wait for further price declines, with a wedding season lull and poor rains curbing appetites.
“The next price target may be $1,000. That’s a sensitive level but it would not be surprising to see a test of the power of that support,” said To.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell further to 22.17 million ounces on Tuesday, the lowest since August 2008.
“Gold and by association, the precious metals complex, has done itself no favours … over the last couple of days, and a market that was already in the doldrums, will find it hard to recover any lustre in the near future,” wrote David Govett, head of precious metals at broker Marex Spectron.
Spot platinum was down 1.4 per cent at $963.40 an ounce and palladium fell a similar amount to $617, both trading near multi-year lows.