Gold futures approached their biggest daily tumble this year on Monday as steady growth in stocks and a weak physical demand for the precious metal pushed investors to book earnings on recent gains.
Gold futures for August settlement lost $29.30 or 2.2% to $1,308.10 per ounce, registering the biggest daily decline for a nearby futures contract since December.
“Overall, we believe that physical demand has remained short of expectations, the latest price increase having been driven largely by speculation,” commodity strategist Eugen Weinberg of Frankfurt-based Commerzbank is quoted by MarketWatch as stating in a note.
Citing India, the strategist said the country’s move to keep a 10% import duty on commodities such as gold and silver is probably going to affect future expectations on gold demand.
“In conjunction with a rather below-average monsoon season, this points to below-average gold demand from India,”added Weinberg.
Prices of the precious metal ended last week lower, but still were able post their sixth weekly gain in a row. Gold had posted four-month lows nearly touching $1,244.30 per ounce in early June, soaring to above $1,337 last week.
Barclays analysts recommended caution regarding gold. Analyst Christopher Louney said latest rally across gold complex seemed toppy. The analysts advised against interpreting recent steady investor injections as a sustained change in confidence, because gold was still a lucrative selling opportunity.
Elsewhere, Zinc prices ascended to a 35-month peak as supplies continued to drop in the wake of signs of higher demand, Bloomberg reported.
Stockpiles followed by the London Metal Exchange have slumped 29% in 2014 to the lowest since December 2010. Data from BNP Paribas SA showed that demand for refined zinc will surpass production by 250,000 metric tons this year.
The price of zinc for settlement in three months increased 0.3% to $2,309.25 per ton as of 4:43 pm on the LME.
To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at email@example.com