Precious Metals Price Watch: Gold Nears Three-Week Low on Stimulus Outlook

on Jun 11, 2013

The gold price slid close to a three-week low on Tuesday, June 11, after the Bank of Japan (BOJ) kept its monetary policy unchanged, with the news adding to speculation that central banks around the world were slowing down the pace of their stimulus measures. The silver price tracked gold lower. Platinum was also under pressure despite supply risks related to labour tensions in South Africa.

**Stimulus Concerns Drag the Gold Price down**
Spot gold shed 1.3 percent to trade at $1,368.61 an ounce as of 10:52 GMT on June 11, whereas US futures for August delivery were down $17.80 an ounce at $1,368.20. As Reuters reported, the gold price lost ground with the BOJ leaving its monetary stimulus unchanged, fuelling concerns that the era of ultra-loose global monetary policy which hadprovided support to the gold price rally in recent years was coming to an end.

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The precious metal had already come under pressure due to speculation that the US Federal Reserve would curb stimulus with the economy improving. Yesterday, Standard & Poor’s lifted its outlook for the US’ credit rating from negative to stable, citing receding fiscal risks whereas last Friday, payrolls data in the US surpassed expectations.
“The market is coming around to the view that the Fed will taper quantitative easing,” noted Societe Generale (EPA:GLE) analyst Robin Bhar, as quoted by Reuters. “The fact that the economy seems to be creating jobs, as we saw with the payrolls report on Friday, makes Fed tapering more likely than not.”

Bahr was also quoted as adding that the BOJ’s “reluctance to further stimulate is just another reason to at least be cautious on gold”.
**SPDR Gold TrustReports Inflows**
Meanwhile, New York’s SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF) reported an inflow of 2.7 tonnes on Monday, the largest in over a month. As Reuters noted, SPDR’s gold holdings were still near four-year lows, down 340 tonnes in 2013.

Reuters quoted Singapore dealers as saying that gold demand had eased after a jump in April, with gold bars and coins now being easier to obtain. Markets in China, the world’s second-largest gold consumer, remain closed for holidays today and tomorrow.
**Platinum, Silver Price Update**
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The silver price also headed south on June 11, with silver for July delivery shedding 1.5 percent to $21.59 an ounce in New York.
Platinum tracked gold and silver lower despite supply concerns on account of labour unrest in South Africa, the world’s largest supplier of the precious metal. Spot platinum declined 1.1 percent to trade at $1,485.74 an ounce.
As Reuters reported, Lonmin Plc (LON:LMI), one of the largest platinum producers, was in talks with South Africa’s Association of Mineworkers and Construction Union (AMCU) to avert a strike. AMCU, which has emerged as a rival to the National Union of Mineworkers (NUM), wants to be recognised as the majority union at Lonmin, as it now represents 70 percent of lower-category workers at the platinum producer.


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