Gold falls below $1,200; heads for worst quarter
Singapore, June 28, 2013
Gold fell below $1,200 on Friday to its lowest since August 2010 before recovering, and is on track to post its worst quarter since at least 1968 on persistent worries over the US Federal Reserve's plan to wind down its monetary stimulus.
Bullion has taken a beating since the beginning of last week - losing as much as 15 percent, or about $200 an ounce - after Fed chairman Ben Bernanke laid out a strategy to roll back the bank's $85 billion monthly bond purchases on the back of a recovering economy.
The lower prices have failed to boost physical demand in Asia, traditionally the biggest buyer of gold, and investors have continued to flee exchange-traded gold funds.
Spot gold fell to a three-year trough of $1,180.71 before gaining 0.03 percent to $1,199.84 by 0508 GMT. US gold fell $11 to $1,200.30.
Traders said stop-loss orders were triggered when gold was sitting on the edge of $1,200. A quarter-end selling spree by funds also hurt.
Prices initially failed to find support even after markets in China, the world's second-biggest gold consumer, opened but saw some gains after some bargain-hunters emerged.
"Demand is not as much as we anticipated," said Peter Tse, director at ScotiaMocatta in Hong Kong. "The stops have already been hit so we might have reached short-term lows for now."
Gold is down 25 percent for the April-June period, the biggest quarterly loss since Reuters began tracking prices in 1968. If gold closes near its three-year low on Friday, it would be the metal's worst weekly performance since 1983.
Bullion has fallen around 30 percent this year - its worst since 1981 - as investors snubbed its inflation-hedge appeal, with a recovering economy stirring fears of an end to central bank support.
When gold prices fell the most in 30 years in April, strong physical demand was key in supporting prices, but not this time. Gold's plunge to three-year lows is drawing only a muted response from global consumers, who are waiting for prices to stabilise.
"Chinese buying is not strong enough to support prices. Instead, speculators in China are selling," a Sydney-based trader said.
Demand in India, the top consumer, also saw only a small increase. But tight supplies due to government restrictions on imports is prompting higher premiums. - Reuters