GOLD prices dropped 2% on Friday, concluding their worst month in a quarter of a century as a strong dollar and recession fears drove investors into less volatile assets.
Gold bullion lost 17% last month, its biggest fall since February 1983, when it ended the month 18,2% lower.
Bullion is down 12% this year, well below the record high of $1030,80/oz struck in March.
“Gold’s moves are mainly currency driven,” Simon Weeks of Bank of Nova Scotia said. “At the month-end, flows are in favour of the dollar.”
Gold was at $720,35/oz by late afternoon, 2,1% lower than Thursday’s close of $735,50.
The dollar and yen posted sharp gains after bleak US economic reports heightened global recession fears.
Gold tends to move opposite to the dollar, whose strength makes bullion more expensive for holders of other currencies.
A sharp drop of the Comex futures open interest last week signalled more unwinding of long positions as extreme price volatility has dented buying sentiment.
“Another big-position account probably stepped to the sidelines,” said George Nickas of FC Stone, referring to the tumbling open interest, a measure of market liquidity. But he said gold should be supported by strong physical buying. Reuters
