LONDON: Gold fell for a fifth session yesterday, its longest losing streak in seven months, as rising stock markets diverted interest from bullion, and ahead of the latest European Central Bank policy meeting and key US data this week.
Prices have fallen sharply after breaking through $1,285 an ounce yesterday, the lower limit of a range they had kept to for much of the previous month. They hit a low of $1,240.69 an ounce earlier on Monday, their weakest since late January.
Spot gold was down 0.3 percent at $1,247.20 an ounce at 1355 GMT, while US gold futures for August delivery were up $1.40 an ounce at $1,247.40.
US stocks opened higher on Monday, with the Dow and S&P 500 at record levels, while European stock markets benefited from a rebound in Chinese manufacturing data, which helped soothe jitters about its economy.
“(Stocks and gold) are negatively correlated because as the global economic situation stabilises and improves, people have a higher risk appetite and want to enter more risk investments,” Natixis analyst Bernard Dahdah said. “When you see stock markets rallying, you can potentially see people dropping out of gold into equities.”
The ECB is tipped to announce a package of policy options after its meeting on Thursday, following heavy hints that monetary policy will be loosened in a variety of ways to support growth.
The following day sees the release of monthly US non-farm payrolls data, a leading barometer of the health of the world’s largest economy. Both events will be closely watched by gold traders for their impact on currencies and US monetary policy.
Looser monetary policy, which cuts the opportunity cost of holding non-yielding gold, is generally positive for bullion prices.
Reuters
