LONDON: Gold slipped two percent to a 3-1/2 month low yesterday, extending losses after strong US data lifted optimism about the economy, while platinum fell after South Africa’s mining minister pledged to mediate in a long-running strike.
US consumer confidence rose in line with expectations, with the Conference Board index at 83 in May from a downwardly revised 81.7 in April, as consumers saw the economy, including the labour market, in a better light.
Separately, the Commerce Department said durable goods orders increased 0.8 percent as demand for defence capital goods surged.
Spot gold fell two percent to its lowest since February 10 at $1,265.76 an ounce in earlier trade and was down 1.9 percent at $1,268.10 an ounce by 1441 GMT, heading for its worst daily loss in two months. US gold futures dropped 1.8 percent to $1,268.50 an ounce.
Equity markets were firmer, eroding gold’s appeal as a hedge against riskier assets, while the dollar cut its losses after the data.
“The US data was good today and most likely had an impact in sending prices lower than the recent range,” Credit Suisse analyst Karim Cherif said.
“But beyond the data it is really the fact that there is very limited investor interest and this is why the impact of economic releases may be a bit emphasised.”
Gold has struggled to break consistently above the $1,300-per-ounce level for the past two weeks, indicating a lack of conviction by investors and speculators, analysts said.
Developments in Ukraine, where air strikes and a paratrooper assault were launched against pro-Russian rebels who seized an airport on Monday, had little impact on gold, which is usually bought as an insurance against risk in times of global political uncertainty.
“The geopolitical situation could impact prices significantly but we need a big change in Ukraine to make a difference,” Sharps Pixley CEO Ross Norman said.
Reuters
