Gold drops to 4-week low on US optimism
Sinagpore, April 3, 2013
Gold fell for a second straight day on Wednesday and hit its lowest in nearly four weeks as investors shifted their money into risky assets for better returns on renewed optimism over the US economy.
Bullion has slipped more than 3 per cent since hitting a 1-month high in March as fears about the debt crisis in Europe subsided, Wall Street rallied and recent strong US economic data curbed safe-haven demand.
Gold fell as much as 0.8 per cent to $1,563.06 an ounce, its weakest since March 8, after hitting an intraday day high initially of $1,576.91 on bargain hunting. By 0306 GMT, it stood at $1,568.16 an ounce, down $7.08.
Weaker gold prices dragged down other precious metals, with silver falling to its lowest since August.
"Actually, all depends on the flavour of the day. Now, I suppose sentiment has shifted. Perhaps, with the US economy on a stronger footing, it's better to be in equities," said CIMB regional economist Song Seng Wun.
"Perhaps one should take a bit more risk. It is more of a case of people taking money off the table from gold because they are not quite sure where the technical downside is for gold at this point."
US data showed on Tuesday February factory orders rose 3 per cent, slightly above expectations.
US gold for June delivery fell $7.40 an ounce to $1,568.50.
The Nikkei rose on Wednesday after the benchmark S&P 500 index climbed to within striking distance of an all-time intraday high, while the euro was subdued ahead of policy decisions by the European Central Bank.
Investors were awaiting the release of the US nonfarm payrolls report on Friday, which may confirm market views the Federal Reserve wants to maintain its extremely accommodative monetary policy.
Two Fed officials voiced cautious optimism on Tuesday the US economy was on a lasting upswing, but they offered differing views on what that outlook ought to mean for the central bank's controversial programme of buying bonds to stimulate growth.
Fears that central banks' money-printing to buy assets will stoke inflation have been a key driver in boosting gold, which rallied to an 11-month high in October last year after the Fed announced its third round of aggressive economic stimulus.
"There is a lack of interest in gold right now and everybody seems to be sitting on the sidelines. Stocks are still looking more attractive for investors than gold and that's where money continues to flow into," said Yuichi Ikemizu, branch manager for Standard Bank in Tokyo.
"The $1,550 level is the low for the current ranges and I doubt that prices will break below that level."
Gold contracts on the Tokyo Commodity Exchange extended losses as Japanese investors shrugged off tensions between North and South Korea.
North Korean authorities were not allowing any South Korean workers into a joint industrial park on Wednesday, South Korea's Unification Ministry and a Reuters witness said, adding to tensions between the two countries. – Reuters
More INTERNATIONAL NEWS Stories
- Investors monitoring Pimco after internal strife
- N Korea tanker ‘leaves Libya rebel port carrying oil’
- Malaysia plane incident not terror related: Interpol
- Crimea closes air space to commercial flights
- Missing Malaysian plane last seen At Malacca Strait
- Stolen passport holder on missing plane is Iranian
- China deploys 10 satellites to search for Malaysia jet
- Libya says halts tanker outside port; rebels deny it
- Libya orders military force to 'liberate' ports
- Big bananas: Chiquita, Fyffes merge
- Radar sweeps, dozens of aircraft, but no sign of plane
- N Korea tanker loads oil at Libya rebel port
- Gold drops as US growth optimism weighs
- Merkel raps Putin; Russia tightens grip on Crimea
- World 'at sea' over missing Malaysian jetliner
- Passports requiring probe were on Malaysia flight
- 40 killed in Yemen as Houthi fighters near capital
- Vietnam finds object in sea; search on
- $5bn poll spend to boost India economy
- Libya authorises use of force against Korean tanker
- Ukraine PM says he will go to US to discuss crisis
- Syrian journalist killed covering fighting
- Malaysian jet may have turned back before vanishing
- No sign of missing plane; Malaysia probes false passports
- Two Europeans not on board 'missing' Malaysian jet
- China draws red line on North Korea
- Saudi sentences three to death for 2003 bombing
- First bitcoin machine opens in UK
- US sanctions will boomerang, warns Russia
- China plans $50bn bank to fund projects