Gold prices drop to near three-year low on U.S. data

SINGAPORE Wed Jun 26, 2013 10:09am IST

24 karat gold bars are seen at the United States West Point Mint facility in West Point, New York June 5, 2013. REUTERS/Shannon Stapleton

24 karat gold bars are seen at the United States West Point Mint facility in West Point, New York June 5, 2013.

Credit: Reuters/Shannon Stapleton

Related Topics

Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

SINGAPORE (Reuters) - Gold fell to its lowest in nearly three years on Wednesday, pressured by strong U.S. economic data that boosted stock markets and supported the U.S. Federal Reserve's plan to scale back its monetary easing measures in the next few months.

Bullion, now down for a seventh session out of eight, has been sliding since Fed Chairman Ben Bernanke laid out a strategy last Wednesday to wind down the bank's $85 billion monthly bond purchases on the back of a recovering economy.

Prices of gold, typically seen as hedge against inflation, have been supported in recent years by central bank steps to support their economies.

Spot gold fell 2 percent to $1,251.50 an ounce by 0413 GMT. Gold for immediate delivery fell to $1,243.94 earlier - its lowest since September 2010.

The metal has now lost 10 percent, or about $140 an ounce, since the beginning of last week.

"We've pushed past the $1,270 level seen last week. That's a key technical level so we are going through a whole bunch of stop losses," said Victor Thianpiriya, commodities analyst at Australia and New Zealand Banking Group.

Comex gold and spot silver both fell to their lowest since August 2010.

Strong economic data has prompted the Fed's decision to consider a wind-down of bond purchases from later this year and end purchases by mid-2014, raising fears that central banks around the world would pull support.

Data on Tuesday showed U.S. consumer confidence jumped in June to its highest level in more than five years, while sales of new U.S. single-family homes rose to their highest level in nearly five years in May.

PHYSICAL DEMAND SUBDUED

When gold fell the most in thirty years in mid-April after 12 annual gains, strong physical demand in Asia helped cap losses.

However, this time around demand has not risen strongly enough to support prices as buyers are waiting on the sidelines for the markets to stabilize.

"In April we had a lot of demand, it made it hard to get hold of bullion," said Gregor Gregersen of Silver Bullion Pte Ltd, a gold and silver dealer in Singapore. "This time, we saw an increase in demand but not the way we saw in April."

Liquidity issues in China have renewed fears of a slowdown in the No. 2 gold consumer.

The People's Bank of China has raised concerns of a lasting credit crunch as it tries to curtail a vast informal loan market and shore up growth, although it has sought to allay fears that its tough stance will lead to a banking crisis.

Shanghai gold futures fell nearly 3 percent on Wednesday.

Demand in India, the top gold consumer, has fallen as the government imposes new rules to discourage gold buying in an effort to reduce a record current account deficit.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 16.23 tonnes to 969.50 tonnes on Tuesday, to their lowest since February 2009.

<GOL/ETF>

Precious metals prices 0413 GMT

Metal Last Change Pct chg YTD pct chg Volume

Spot Gold 1251.50 -25.24 -1.98 -25.26

Spot Silver 18.86 -0.72 -3.68 -37.71

Spot Platinum 1326.49 -23.51 -1.74 -13.58

Spot Palladium 655.97 -6.77 -1.02 -5.21

COMEX GOLD AUG3 1248.60 -26.50 -2.08 -25.49 44810

COMEX SILVER JUL3 18.84 -0.69 -3.51 -37.83

Euro/Dollar 1.3061

Dollar/Yen 97.84

COMEX gold and silver contracts show the most active months

(Editing by Richard Pullin and Muralikumar Anantharaman)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
SachiNewDelhi wrote:
Is this Reuters India or Reuters ‘Global’?

May be Indians have finally stopped having faith in the ‘rupee’ and just ditched it in favor of the $$$$. Is that it?

How shameful and lazy of you guys not to report about the cost of gold per 10 gm in India in rupees.

Who knew Reuters was such as ‘expert’ in copy and paste.

Jun 26, 2013 3:05pm IST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

RAINFALL THIS YEAR

REUTERS SHOWCASE

Election 2014

Election 2014

Thousands mob Modi as election race starts in Varanasi.  Full Article 

Monsoon Forecast

Monsoon Forecast

Met office rules out surplus monsoon in 2014.  Full Article 

Facebook's Performance

Facebook's Performance

Facebook Q1 revenue grows 72 percent on rising mobile ads.  Full Article 

Earnings Season

Earnings Season

Bharti Infratel Q4 net profit jumps 64 percent.  Full Article 

Solar Dispute

Solar Dispute

Green groups urge U.S. to drop solar trade case against India.  Full Article 

Oil Imports

Oil Imports

India to make May-July oil payments to Iran - sources.  Full Article 

Rice Exports

Rice Exports

India may cede top rice exporter spot under Southeast Asian price onslaught.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage