RTRS: Gold steadies near two-week low on weak oil, equities
SINGAPORE: Gold steadied on Thursday on bargain hunting after falling more than 2% in New York, but recession worries which had sent oil prices and equities down could ignite fresh selling from speculators.
Goldman Sachs said it had lowered its forecasts for the price of gold in a three, six- and 12-month time horizon because it expects continued financial market deleveraging to further strengthen the US dollar.
Gold was trading at $713.80 an ounce, up $2.65 or 0.37% from New York's notional close on Wednesday, when it fell as low as $707.80, its weakest since Oct. 27, as investors dumped risky assets including gold and stocks.
Bullion has lost more than 30% in value since hitting record at $1,030.80 in March, with losses in equities also forcing investors to cash in to cover losses.
"Gold is not immune to the general panic in other markets and hence will gyrate in line with the general sentiment," said analyst Pradeep Unni at Richcomm Global Services.
"Supports aren't strong enough to drag fresh buying and huge volatility is keeping many investors at bay. The uncertainty with respect to US bailout plan is exaggerating the fear," he said.
The Nikkei slid 5.3% to a two-week closing low on Thursday after Wall Street shares plunged as the US Treasury backed away from using its $700bn financial bailout to buy bad mortgages.
Oil dropped for a third straight day to hit a 22-month low of $55 a barrel as pessimism about the global economy overshadowed OPEC's comments that it could cut output again as early as end-November.
"The stock market and currencies are the focus as investors try to gauge the state of the real economy," said Koji Suzuki, a senior analyst at SBI Futures Co Ltd, adding that investors were showing a strong aversion to parking their money in risky assets.
"Investor sentiment is really chilly at the moment," he said. Selling pressure could come from hedge funds as the year-end nears and they begin to adjust their positions, which often prompts selling of the precious metal to raise cash, he said.
