Gold falls to 16 week low

Price is now at lowest since February
Gold bars
By Reuters
Thu 29 May 2014 11:36 AM

Gold extended losses to a third straight session on Thursday, hitting fresh 16-week lows on a stronger dollar and weak physical demand in top buyer China.

Spot gold fell to $1,251.70 an ounce - its lowest since early February, before recovering slightly to trade down 0.4 percent at $1,253.41 by 0638 GMT. It dropped nearly 3 percent over the past two sessions.

The U.S. dollar hovered at a two-month high against a basket of major currencies, while Asian shares consolidated recent gains.

A stronger dollar makes gold more expensive for holders of other currencies, while higher equities dent the precious metal's appeal as an investment-hedge.

"I think prices are going to fall below $1,230 because we don't see any physical demand to support these lower levels," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong. "The markets are very bearish at the moment, with the strong dollar is also hurting gold's appeal."

Demand in No. 1 bullion consumer China failed to pick up significantly despite the sharp drop in prices.

Chinese premiums to global prices were largely unchanged at about $2-$3 an ounce from before the price drop, indicating that strong buying has not materialised.

Bullion investors were eyeing developments in Ukraine, where relative calm returned to the streets of Donetsk on Wednesday after the biggest battle of the pro-Russian separatist uprising in eastern Ukraine.

An uncertain geopolitical situation creates safe-haven demand for gold.

Among other precious metals, platinum gained 0.2 percent while palladium was largely holding near its highest in almost three years hit in the previous session.

A deadlock in South Africa's crippling 18-week platinum strike will soon be broken after movement made on both sides of the wage dispute, the country's new mines minister Ngoako Ramatlhodi declared on Wednesday.

For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Last Updated: Thu 26 Jan 2017 01:27 PM GST

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.