Gold prices held near a two month lows on Tuesday amid stubbornly low physical demand and fading interest from investors, analysts said.
Edel Tully, a precious metal strategist at UBS in London, said that physical players were prepared to buy gold when the metal experiences a large intraday drop, in a pattern seen on Friday. “But this buying interest does not have ample staying power; once satisfied it tends to peter off until the next occasion gold tumbles,” she added.
Investors have also reduced the purchases of physical gold, such as bullion coins, from the elevated levels of May and early June, dealers said.
The US Mint has sold 77,000 one-ounce American Eagles gold coins so far this month, less than the totals for May and June of 190,000 and 97,000 coins, respectively.
In London, spot gold fell 0.4 per cent to $1,178 a troy ounce. On Monday, gold dropped to $1,177 an ounce, its lowest level since mid-May. Gold prices hit a nominal all-time high of $1,264.90 an ounce in mid-June.
In real terms, adjusted by inflation, gold is significantly lower than its record of more than $2,000 set in the 1980s.Other precious metals, including silver and platinum, have also suffered losses.
Elsewhere in commodities markets, crude oil prices rose in earlier trading, but the market was thin awaiting news on the direction of the global economy and the forecast for tropical storms in the US Gulf of Mexico.
The US National Hurricane Centre was tracking an area of thunderstorms near Puerto Rico and said the system had a 30 per cent chance of developing into a tropical storm.
The US hurricane season, which runs from June to November, usually peaks in early September. The hurricanes could stop oil and natural gas production as they force oil companies to evacuate staff from offshore platforms. It could also hit coastal refineries with flooding and high winds.
In New York, Nymex August West Texas Intermediate rose 13 cents to $76.67 a barrel. The August contract expires at the close of business on Tuesday. The more active Nymex September WTI contract rose 12 cents to $77.02 a barrel.
Olivier Jakob, of consultancy Petromatrix, said that technically WTI was “showing no momentum”. The benchmark “tried for the last five trading days to move above the resistance of the 200-day moving average and it has failed each time,” he said.
In London, ICE September Brent rose 14 cents to $75.76 a barrel.
