SINGAPORE, June 25 (Reuters) – Gold reversed early gains on Tuesday as worries persisted over an early end to U.S. monetary stimulus measures and a cash crunch in China, bringing the metal’s losses to more than 8 percent since the start of last week.
Bullion had edged higher earlier in the Asian trading session after two top Federal Reserve officials downplayed an imminent end to monetary stimulus. But a lack of strong buying interest and continued uncertainty pulled prices down.
“There is lots of uncertainty in the markets. People are waiting for prices to stabilize before buying,” said a trader in Hong Kong.
Gold prices have taken a beating since U.S. Federal Reserve Chairman Ben Bernanke gave his most explicit signal yet last week that the central bank was considering scaling back an $85-billion-a-month bond purchase programme. (Full Story)
The precious metal has benefited in the past few years as it was seen as a hedge against the Fed’s inflation-inducing policies.
Minneapolis Fed President Narayana Kocherlakota said on Monday investors were wrong to view the central bank as having become more keen to tighten policy, while another official said the bank would be running an accommodative policy even if it dialled back stimulus this year. (Full Story)
Spot gold XAU= fell 0.5 percent to $1,275.21 an ounce by 0413 GMT after rising to a session-high of $1,288.16 earlier. Comex gold GCcv1 fell $2 to $1,275, not far from near three-year lows hit last week.
“Price-sensitive buyers may wait for a well-defined bottom before entering the market,” HSBC analysts wrote in a note, suggesting that the big drop in prices over the last six sessions has not been enough to woo buyers.
HSBC on Monday cut its gold price forecast for 2013 and 2014, citing the Fed’s wind-down plan and weak growth prospects in China. Goldman Sachs also cut its forecast. (Full Story)
Shanghai gold futures SHAUZ3 fell 0.3 percent on Tuesday, indicating soft demand in the second-biggest bullion buyer after India.
Chinese stocks extended losses even as money market rates fell back towards more normal level as the central bank signalled a slight softening in its crackdown on easy credit by opting not to change the amount of cash in the market. (Full Story)
A slowdown in China could inflict another blow to gold, which has seen a falling off in demand in India, where the government is trying to curb gold imports to reduce its current account deficit. GOL/IN
Holdings in SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, fell 0.43 percent to 985.73 tonnes on Monday – its lowest in over four years. GOL/ETF HLDSPDRGT=XAU
Precious metals prices 0413 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1275.21 -6.08 -0.47 -23.85
Spot Silver 19.51 -0.14 -0.71 -35.57
Spot Platinum 1327.24 -1.26 -0.09 -13.53
Spot Palladium 660.22 1.22 +0.19 -4.59
COMEX GOLD AUG3 1275.00 -2.10 -0.16 -23.92 16300
COMEX SILVER JUL3 19.49 -0.01 -0.04 -35.71 4784
COMEX gold and silver contracts show the most active months