Gold near 3-month low as US debt deadline looms
Singapore, October 14, 2013
Gold was hovering near three-month lows on Monday despite the failure of weekend talks in Washington to reach an agreement to avert a US debt default and as large sell orders in the previous session rattled investors.
Spot gold was down 0.07 per cent at $1,271.71 an ounce by 0323 GMT after falling over 1 per cent on Friday. Unusually large sale orders in New York futures prompted a near $30 drop in prices in about three minutes and a brief trading halt.
If the metal ends lower on Monday, it would be gold's longest losing streak since May.
"People are worried about the US situation and their first reaction is to hold cash and only then they look at safe haven assets like gold," said one Hong Kong-based precious metals trader. "That is why if the US doesn't find a solution, gold will be sold initially."
Gold hasn't seen a lot of safe-haven bids over the last two weeks, when parts of the US government have been shut down due to the budget impasse.
Instead, prices have been hurt by large sell orders - most likely from funds - that some believe to be amplified by technical selling. Earlier this month, another big trade sent prices lower by $25 an ounce in a short period of time.
"Investors are on the sidelines. There seems to be a little bit of speculative appetite to the downside right now," said another trader.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund and the best measure of investor sentiment, fell 5.40 tonnes to 890.98 tonnes on Friday.
FISCAL IMPASSE, TAPERING
Senate negotiations to bring the US fiscal crisis to an end showed signs of progress on Sunday, but there were no guarantees the US government shutdown was about to end or that an historic default would be avoided.
Congress has until October 17 to raise the debt ceiling, or risk defaulting.
"If resolved by Thursday, gold will take a bearish cue and will look to tapering and monetary policy stance for direction," said Barnabas Gan, analyst at OCBC Bank in Singapore.
Many in the market now expect the Fed to begin stimulus tapering only after the uncertainties over the US budget are resolved. - Reuters
More INTERNATIONAL NEWS Stories
- EU scraps duty on jet fuel imports
- Tech giants call for more controls on surveillance
- Thai PM dissolves parliament, calls snap polls
- Arabs seek nuclear arms-free Middle East
- Anti-Russia protests rage in Ukraine, Stalin statue felled
- SAfricans remember Mandela with praise, prayers
- UN inspectors visit key Iran nuke site
- Ice storm causes blackouts, flight delays in US
- Ruling Congress party punished in India polls
- US proposes annual GCC defence summit