Gold price extends rout to lowest level since December
The price of gold has extended its rout during today’s session and was trading at its lowest level since the start of December. The precious metal is poised to register its longest losing run in almost two years as concerns over Europe failed to offset expectations of a mid-year hike in US borrowing costs which pushed the dollar to a fresh 11-year peak.
Gold for immediate delivery had tumbled close to $10, or 0.85 percent, to $1,157.06 per troy ounce as of 08:43 GMT, and was trading over six percent beneath its 50-day simple moving average of $1,231.08. The precious metal slumped to its lowest level since 01 December, hitting an intraday low of $1,142.65. During the previous session, bullion failed to hold on to earlier gains and settled 44 cents in the red. Should the precious metal end the session in negative territory, it would be its longest losing streak since May 2013, having declined during the previous six sessions.
According to FastMarkets analyst Will Adams, the precious metals complex is suffering downward pressure, with gold breaching $1,160 and trading near the $1,131.60 low from last November, which was the weakest level since April 2010. Adams claimed that given that a looming hike in interest rates by the Fed and a strengthening dollar “have been on the agenda a long time, we are surprised by the extent of gold’s reaction, especially as the downward spiral in many currencies could well create risks of their own. As such, we feel this pullback in gold is an initial reaction, but a secondary reaction may well end up being bullish.”
On the COMEX in New York, gold for April delivery had tumbled over $10 to $1,156.5 as of 08:53 GMT. Markets will eye developments in Brussels for further cues, as euro area officials negotiate with Greek representatives over the country’s bailout deal, with reform proposals apparently hitting a deadlock. Technical teams will start to consider Greece’s reform plans on Wednesday, after eurozone ministers lost patience with the slow progress since its bailout extension was agreed in February.
Eurogroup president Jeroen Dijsselbloem reportedly said that the last two weeks have been “a complete waste of time”. Dijsselbloem declared that work begins in Brussels on Thursday when the ECB’s Governing Council is set to hold a teleconference to discuss extending emergency liquidity assistance for Greek banks.
Reuters quoted Phillip Futures analyst Howie Lee as saying: “Unless the situation surrounding Greek’s debts take a huge turn for the worse, the bearish sentiment engulfing gold currently will likely triumph over any mild safe haven appeal the precious metal is exhibiting”.