Gold breaks below $1,300
London, March 27, 2014
Gold hit a six-week low on Thursday, breaking below $1,300 an ounce for the first time since mid-February, as speculation that US rates would rise sooner than expected and easing tensions over Ukraine pushed prices down.
Selling accelerated as the metal broke through psychological support points on price charts at $1,300 an ounce, traders said, and its 200-day moving average at $1,296 an ounce. That took prices to their lowest since Feb. 13 at $1,291.36 an ounce.
Spot gold was down 0.8 percent at $1,292.99 an ounce at 1215 GMT, a drop of around 3 percent so far this week. U.S. gold futures for April delivery were down $9.40 an ounce at $1,294.00.
"There's been some continuous speculative profit-taking as bullion remains under pressure from easing geopolitical tension and long liquidation after the early 2014 uptrend broke," VTB Capital analyst Andrey Kryuchenkov said. "The Fed's regular policy statement last week has taken some shine off the yellow metal."
He added: "With little physical support here, gold remains weak. Now all eyes are on non-farms and the ECB next week."
Non-farm payrolls data, due next Friday, are seen as a major barometer of US economic strength. Wednesday's firm US durable goods data supported expectations that the world's biggest economy was on the road to recovery.
Traders are watching data for clues as to when US monetary policy will normalise. Federal Reserve Chair Janet Yellen said last week that rates could start rising early next year, raising the opportunity cost of holding non-yielding bullion.
The metal is also losing support from the stand-off between Russia and the West over Ukraine, with European stocks well off the five-week lows they hit earlier this month on growing tension over Russia's annexation of Crimea.
PHYSICAL GOLD SOFT
Traders reported little interest from buyers of physical gold, who tend to return to the market strongly when prices fall, overnight in Asia. Prices around the $1,225-1,250 region may be needed to tempt buyers in major consumer China, they say.
"Physical demand remains far below levels that indicate this community considers current prices attractive," UBS said in a note on Thursday. "This suggests that gold needs to descend further before it finds its price floor." - Reuters