FT: Gold’s sustained fall takes it to six-week low
Gold prices fell further to a six-week low on Wednesday morning as the yellow metal continued to lose the momentum that had taken it to an all-time high in June.
The market was also nervy as traders puzzled over the implications of 346 tonnes of gold swaps announced by the Bank for International Settlements in a recent annual report.
Spot gold in London fell 0.4 per cent to $1,187.75 a troy ounce, its lowest since May. The precious metal has suffered a 6 per cent correction since its nominal all-time high of $1,264.90 an ounce last month.
Anne-Laure Tremblay, precious metals strategist at BNP Paribas, said the market had lost momentum.
“In the absence of significant newsflow to push the gold price higher, it seems that the bullish momentum has reversed for now,” she said.
Edel Tully, precious metals strategist at UBS, noted an increase in gold buying from consumers in Asia on the back of the fall in prices.
However, she said: “The physical market has a lot to do to prevent gold falling further. Physical demand from Asia has been quite evident this morning, and will escalate at current prices, but market sentiment suggests that gold has further room to the downside.”
Meanwhile, GFMS, the precious metals consultancy, reiterated its forecast for gold to touch $1,300 an ounce before the end of the year, adding that physical demand should prevent prices falling below $1,150.
“Even though progress is dependent on yet higher inflows from investors, economic conditions still seem to favour such growth in investment over the balance of this year and, indeed, they probably will continue to do so well into 2011,” said Philip Klapwijk, chairman of GFMS.
Elsewhere in commodity markets, oil was more or less flat, while base metals slipped slightly with the markets unsure of direction as they awaited some clear signals on the strength of the global economy.
By late morning in London, Nymex August West Texas Intermediate was 9 cents higher at $72.07 a barrel, while copper for delivery in three months was 0.3 per cent lower at $6,523 a tonne on the London Metal Exchange.
