July 27, 2013
Gold dropped 1 percent early on Friday on pre-weekend profit taking, but bullion was still set to post a sharp weekly gain as wariness over the US Federal Reserve’s message at next week’s monetary policy meeting pushed the dollar down. Bullion is on track for a 2 percent weekly gain, set for its third consecutive weekly rise and its first three-week rise since March, prior to the two-day $225 selloff in mid April.
A rally to climb back over a key technical threshold at $1,300 an ounce earlier in the week prompted speculators fearing a reversal of the recent downward price trend to rush to buy back bearish bets. On Friday, sharp losses in industrial metals across the board more than offset the dollar’s fall to a five-week low, which was driven by speculation the Federal Open Market Committee (FOMC) will emphasise next week its intention to keep interest rates low for longer.
“It is understandable that money managers be wary of any slight change in verbiage from the Fed in these low interest-rate days,” said Carlos Perez-Santalla at brokerage Marex Spectron. Spot gold fell 1 percent to $1,320.21 per ounce by 12:33 pm EDT (1633 GMT). Traders said some profit-taking was seen as buyers cashed in from gold’s Friday session high of $1,340, about $160 higher than the three-year low hit June 28.
US Comex gold futures for August delivery were down $8.60 at 1,320.20 an ounce. Bullion has gained more than 8 percent in three weeks after the Federal Reserve in late June assured financial markets it would only start phasing out its monetary stimulus when it was sure the US economy was strong enough to stand on its own. Bullion has lost a fifth of its value this year as investors feared recovery in the United States might prompt the Fed to scale back its $85 billion monthly bond purchases. Outflows from gold exchange-traded funds (ETFs) have also weighed.
Holdings of SPDR Gold Trust, the world’s largest gold ETF, fell 0.3 percent to 927.36 tonnes on Thursday, the lowest in four years. The market now digests news that Russia, Ukraine and Azerbaijan were among eight countries that increased their gold holdings in June, data from the International Monetary Fund showed, while Turkey, Germany and seven other countries shed some of their bullion. Physical demand in China has been key to supporting gold prices this year amid the exit from ETFs.
Data from the Shanghai Gold Exchange shows that physical deliveries have totalled 1,198.4 tonnes so far this year. The exchange delivered 1,140 tonnes in all of 2012. Among other precious metals, silver fell 1.9 percent to $19.81 per ounce, platinum was down 1.9 percent at $1,417.99 while palladium slipped 2.3 percent to $719.72.Courtesy:Reuters
Published in ZaraiMedia.com