LONDON: Gold fell to fresh six-week lows under $1,300 an ounce yesterday, and was on track for a second straight weekly decline as an improving US economic outlook lifted the dollar and bolstered appetite for risk.
Bullion has dropped about $100 an ounce from a six-month high in the last nine trading sessions on declining geopolitical tensions, strong US economic data and comments by Federal Reserve chair Janet Yellen that interest rates could rise in the first half of 2015.
Low interest rates, which cut the opportunity cost of holding non-yielding bullion above other assets, had been an important factor driving bullion higher in recent years.
Spot gold, firmer initially, fell to its lowest since February 13 at $1,286.46 an ounce earlier and was down 0.2 percent at $1,287.60 by 1242 GMT. It was headed for a 3.3 percent weekly fall.
Gold futures for April delivery fell $6.40 to $1,288.50 an ounce.
“Considering that geopolitical tensions have somewhat abated and risk sentiment has improved after good US data, you will barely see any safe-haven buying at this point and there is nothing to hold gold up,” VTB Capital analyst Andrey Kryuchenkov said.
“If we don’t close below $1,290 today, we could see some consolidation around these levels ahead of the ECB on Thursday and the US nonfarm payrolls yesterday.”
The dollar rose 0.1 percent against a basket of currencies, mostly helped by a fall in the euro on speculation the European Central Bank could cut its interest rates to negative to ward off disinflation in the currency bloc at its next policy meeting on Thursday. European shares also moved higher.
The US currency was also aided by data yesterday showing US consumer spending rose in February, in the latest sign that the economy was regaining strength after a setback caused by bad weather.
The next focus for the market will be the March non-farm employment report due next Friday, which will give clues on the strength of the economy.
As a gauge of investor interest, holdings of the SPDR Gold Trust, the world’s biggest gold-backed exchange traded fund, remained unchanged on Thursday after two straight days of outflows.
Reuters
