Gold Futures Decline 0.9 Percent for the First Time in Five Weeks, Good Time for Gold Miners

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Gold Futures Decline 0.9 Percent for the First Time in Five Weeks, Good Time for Gold Miners
Gold Futures Decline 0.9 Percent for the First Time in Five Weeks, Good Time for Gold Miners

Gold Futures Decline 0.9 Percent for the First Time in Five Weeks, Good Time for Gold Miners

For the first time in five weeks, gold futures declined 0.9 percent where prices capped a four-day losing streak on 2nd August. Finance experts view it a result of strengthening hedge funds which according to them lowered the bullish gold bets. Also, there are indications of accelerating U.S. growth which also was expected to lower the gold prices.

U.S. Commodity Futures Trading Commission data show that money managers cut their net-long position by 6.5 percent to 65,517 futures and options by July 30. Market analysts have mixed opinions on the gold prices in the next couple of weeks as many of them are expecting a slump, some others are still bullish and expect that the prices may soar, particularly, as the demand from China is still higher.

China Still Demands a Huge Amount of Gold

There are no indications for the lowering of the consumption of gold in China despite a slight slowdown in its national economy as gold imports rocketed this year. According to estimates gold imports this year are all set to cross last year’s record-setting imports of 776 metric tons. By June 2013, China imported 500 tons and may end up importing more than 900 to 950 tons by the end of the year.

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Companies Looking to Cash in the Slump in Gold Prices

It is a good time for gold miners as the prices are lower comparatively. The recent decision by Evolution Mining Ltd. (EVN) to seize on the slump in the gold prices indicates a lot about the scope for gold mining. A lot of companies are selling gold making it even easier for the gold miners who were waiting for lower prices.

Several of the gold-mining companies even announced write-downs recently as the prices decreased to the record levels after a long time. In the US, all those who were using gold as a hedge against inflation, deflation or currency devaluation are now selling it and that may be a reason for the lower prices.

The overall economic growth of the US is on the right track as it grew at a faster pace than it was predicted earlier. The national economy grew faster thanks to the expanding of manufacturing sector but also drop in unemployment rate which is the lowest since December 2008. However, amidst all positive indications, gold tumbled 22 percent in 2013.

To contact the reporter of this story: Jonathan Millet at john@forexminute.com