The gold price has fallen to a five-year low in anticipation of a rise in USA interest rates later this year, hitting the shares of gold miners.
Spot gold was down 2.4 per cent at $1,106.90 an ounce by 0302 GMT after falling as far as $1,088.05, its lowest since March 2010.
“The Asian market missed the action on Friday when U.S. players were already attempting a break of $1,130, a major support level, and has pushed prices much lower today”, ABN Amro analyst Georgette Boele said.
“The USA greenback rallied to a three-month high following comments from the Fed chairperson last week, which eased gold’s appeal as a safe haven”.
Photo Credit:Reuters/Bobby Yip By Manolo Serapio Jr MANILA, July 22 (Reuters) – Gold fell on Wednesday for a seventh session in eight, reflecting sustained downward pressure on the metal days after its steepest drop in nearly two years, with more losses seen ahead as the demand outlook dims.
Rates were cut to close to zero during the recent financial crisis and the markets have not seen an increase in rates since June of 2006.
Official numbers out of Beijing show the country has 53.32 million troy ounces of gold in its reserves, up 57 per cent from the end of April 2009, the last time the government updated the figure.
Gold has managed to reach past $ 1,100 support level after the unexpected plunge.
The immediate trigger for a severe drop in the prices of gold, according to bullion experts, was a sharp sell-off in Chinese market, which dented investor sentiment.
“It’s the strength of the dollar, that’s what’s been drilling gold down this year”, said Jim Steel, chief precious metals analyst at HSBC in New York.
On Tuesday, spot gold was up 0.2% at $1,098.58 per ounce at 3:00 p.m. EDT, but traders remained uneasy due to another day of unusually large trading volumes in China, where many suspect the selling spree originated.
Platinum fell below the key $US1,000-an-ounce level for the first time in more than six years while palladium extended losses to hit its lowest since November 2012.
Positive US economic data, from home-building statistics to consumer prices, has firmed expectations the U.S. Federal Reserve will raise short-term interest rates later this year.
Gold’s fall has been exacerbated by a slide in China’s stock market, as few people have the cash to buy the yellow metal.
Reflecting fading interest in gold, holdings in the SPDR Gold Trust investment fund fell to their lowest since 2008.
