Gold falls on upbeat economic data
LONDON (Aug 6) Gold fell around 1 per cent on Tuesday as data indicating economic growth on both sides of the Atlantic dented its appeal as a safe haven, while a steady dollar also weighed prices down.
The figures showed that growth in the US services sector rebounded from a three-year low, while British businesses boomed and activity at Eurozone companies expanded, albeit modestly, in July for the first time in 18 months.
Spot gold fell as much as 1.2 per cent to $1,287.44 an ounce early in the day and was down 1.1 per cent at $1,289.16.
US gold futures for December fell $13.90 to $1,288.50 an ounce.
Losses were exacerbated by technical selling as automatic sale orders were placed by traders below the $1,300 an ounce mark to limit losses, traders said.
“We fell through the psychological support level of $1,300 last night, and it does feel as the prevailing dollar strength is curtailing gold momentum,” bullion dealer Sharps Pixley CEO Ross Norman said.
“It is hard to read too much into moves during the summer months as the market can fluctuate widely on very small trades ... I suspect we can see some more downside from here in the short term.”
The dollar was steady against a basket of currencies, and European shares nudged higher after data showed a faster-than-expected recovery in the UK and German economies.
Benchmark US Treasury yields rose to around 2.65 per cent, below July’s two-year peak of 2.755 per cent but still higher than at the start of the year. The returns from US bonds are closely watched by the gold market, given that the metal pays no interest.
Gold has lost around 25 per cent of its value this year on fears the US Federal Reserve will curb its monetary stimulus on signs of economic recovery.
Silver was down 0.1 per cent to $19.68 an ounce.
Platinum fell 0.9 per cent to $1,434.24 an ounce and palladium lost 0.7 per cent to $726 an ounce.
