Gold, silver prices tumble to lowest since late 2010 on strong US economic data

Written By Unknown on Rabu, 26 Juni 2013 | 22.14

On Wednesday, gold fell to its lowest in nearly three years.

Reuters | Jun 26, 2013, 02.02PM IST
LONDON: Gold and silver prices tumbled to their lowest in nearly three years on Wednesday as investors liquidated precious metals after well-received US data fuelled fears the Federal Reserve would rein in its ultra-loose monetary policy.

Spot gold slid to its lowest since September 2010 at $1,233.05 an ounce and was down 3.1% at $1,237.36 an ounce at 0807 GMT. US gold futures for August delivery were down $37.90 an ounce at $1,237.20.

Silver hit its lowest since August 2010 at $18.55 an ounce and was down 4.4% at $18.81 an ounce.

"We've pushed past the $1,270 level seen last week. That's a key technical level so we are going through a whole bunch of stop losses," said Victor Thianpiriya, commodities analyst at Australia and New Zealand Banking Group. Comex gold and spot silver both fell to their lowest since August 2010.

Strong economic data has prompted the Fed's decision to consider a wind-down of bond purchases from later this year and end purchases by mid-2014, raising fears that central banks around the world would pull support. Data on Tuesday showed US consumer confidence jumped in June to its highest level in more than five years, while sales of new US single-family homes rose to their strongest level in nearly five years in May.

PHYSICAL DEMAND SUBDUED

When gold fell the most in thirty years in mid-April after 12 annual gains, strong physical demand in Asia helped cap losses. However, this time around demand has not risen strongly enough to support prices as buyers are waiting on the sidelines for markets to stabilize.

"In April we had a lot of demand, it made it hard to get hold of bullion," said Gregor Gregersen of Silver Bullion Pte Ltd, a gold and silver dealer in Singapore.

"This time, we saw an increase in demand but not the way we saw in April."

Liquidity issues in China have renewed fears of a slowdown in the No. 2 gold consumer. Shanghai gold futures fell nearly 3 percent on Wednesday.

The People's Bank of China has raised concerns of a lasting credit crunch as it tries to curtail a vast informal loan market and shore up growth, although it has sought to allay fears that its tough stance will lead to a banking crisis.

Demand in India, the top gold consumer, has fallen as the government imposes new rules to discourage gold buying in an effort to reduce a record current account deficit.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 16.23 tonnes to 969.50 tonnes on Tuesday, their lowest since February 2009.


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