Gold drops as US growth optimism weighs
Singapore, March 10, 2014
Gold extended losses to a second session on Monday after strong US jobs data eased worries of an economic slowdown and dimmed the metal's safe-haven appeal.
Fears among Chinese investors over a slowdown in the world's second biggest economy also hurt prices, with investors in Shanghai futures and spot contracts dumping bullion.
The drop in prices after five straight weekly gains comes despite weaker Asian equities and a geopolitical crisis in Ukraine, which would typically support gold.
"Gold is being pushed lower on the nonfarm numbers and higher 10-year U.S. Treasury yields," said one precious metals trader in Hong Kong. "There is some pressure from China as well because of the weak exports data."
Spot gold, which fell as much as 0.8 percent on Monday, was down 0.5 percent at $1,333.11 an ounce by 0247 GMT. It dropped nearly 1 percent on Friday.
US job growth accelerated sharply in February despite the icy weather that gripped much of the nation, keeping the Federal Reserve on track to continue reducing its monetary stimulus - which had boosted gold prices.
China's exports unexpectedly tumbled in February, swinging the trade balance into deficit and adding to fears of a slowdown despite the Lunar New Year holidays being blamed for the slide.
"We can see liquidation from the Shanghai futures exchange and there is no fresh buying interest on the physical side," said Peter Fung, head of dealing at Hong Kong's Wing Fung Precious Metals.
China is the top consumer of gold.
But with the crisis in Ukraine still unresolved and tensions between the West and Russia remaining high, gold will not drop below $1,320, Fung said.
Chinese prices were trading at a discount of $5-$6 an ounce to spot prices on Monday, traders said, in a sign of weak demand. Prices were at a premium of over $20 in the beginning of the year. - Reuters