Gold slipped to its lowest in more than three months and looked set for an eighth consecutive losing session as a stronger dollar and expectations of a rate hike by the Fed Reserve curbed appetite for non-interest yielding assets.
According to Bloomberg, generic pricing, the eight session straight slump is the longest the precious commodity has suffered since March 2009.
Spot gold declined to its lowest since December 1 at $1,147.10 an ounce in early trading and closed 1% lower at 1,149.76.
Gold for April delivery declined by more than $10.90 to $1,149.20 an ounce.
“I don’t expect prices to fall below $1,150 as opportunistic buying would come in at that level,” ING Bank senior strategist Hamza Khan said.
“The Fed has been so evasive in nailing down a date for an interest rate hike that until we actually see some concrete plans we are going to be trading within the $1,150 to $1,250 range.”
After the better than expected monthly non-farm payrolls jobs growth report released last Friday, there has been increased speculation that the Federal Reserve would raise the lending rates sooner than expected.
An increase in the interest rates would severely dent demand for non-interest yielding interests like gold and strengthen the dollar.
A stronger dollar would make assets that are denominated in dollars like gold more expensive to holders of other currencies.
The drop in gold prices was also partly due to pressure from stronger European shares. The shares rebounded from the previous day’s selloff after a boost in the regions exporters by a weaker euro.
Gold demand in Asia, however, remains healthy with bargain hunters taking advantage of the low prices.
Gold in Asia, the top global bullion consuming region, was trading at a relatively hefty premium of $5 above the London benchmark according to reports by Reuters.
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