LONDON: Gold fell to its weakest in 2-1/2 months yesterday, breaking through key support at August lows as stock markets steadied and the dollar hit a one-year high against the euro ahead of a European Central Bank meeting this week.
The metal has been underpinned by worries about the stand-off between Russia and the West over Ukraine and unrest in the Middle East, but strength in stocks and the dollar, plus weak physical demand from China and India, has offset that.
“It’s when the dollar hits big numbers that gold gets punished and this is clearly one of those moments,” Ross Norman, CEO of bullion broker Sharps Pixley, said.
“There is a lot to be concerned about on the political and economic front (but) people tend to get inured to the idea of bad news and it doesn’t affect them anymore.”
Spot gold was down 1.4 percent at $1,268.83 an ounce at 1311 GMT, having hit its lowest since mid-June at $1,265.10. US gold futures for December delivery were down $17.60 at $1,269.70.
Selling picked up after the metal broke through support at $1,273.06 an ounce, its August 21 lows. European shares were little changed on Tuesday as investors await the ECB’s policy decision later this week before chasing stocks higher.
Stock markets have rallied recently following dovish comments by ECB President Mario Draghi, which sparked bets that the central bank is preparing to pump more liquidity into the system, possibly via purchases of government or corporate bonds, a measure known as quantitative easing.
Reuters
