WebSify
Follow us on
Mail
Print

Gold falls to two-week low; Chinese demand worries grow

Source : REUTERS
Last Updated: Thu, Jan 23, 2014 04:54 hrs
Gold

Gold fell to its lowest level in nearly two weeks on Thursday as investors awaited U.S. data to determine the outlook for the Federal Reserve's stimulus, while platinum eased from a 2-1/2 month high ahead of planned strikes at South African mines.

Gold's decline comes despite weakness in equities as some traders were worried that demand in China - the world's biggest buyer of bullion - would be hurt by a slowing economy. Gold normally moves in the opposite direction from equity markets.


Data on Thursday showed activity in China's factory sector contracted in January for the first time in six months as new orders declined, confirming that a mild slowdown at the end of 2013 has continued into this year.

"Those numbers are making some people fear that China may not buy as much gold as last year," said a trader in Hong Kong. "If the economy is slowing, then luxury and discretionary spending might be cut down."

Spot gold eased 0.2 percent to $1,233.98 an ounce by 0351 GMT. It earlier hit $1,231.36 - its lowest since January 10.

Holdings in SPDR Gold Trust, the largest gold-backed exchange-traded fund and a good measure of investor sentiment, fell 1.20 tonnes to 795.85 tonnes on Wednesday.

Premiums for 99.99 percent purity gold on the Shanghai Gold Exchange - a physical trading platform - held steady at about $12.

China demand was stronger at the beginning of January due to purchases ahead of the Lunar New Year holiday.

Analysts expect overall Chinese purchases to slow this year as buyers wait for prices to stabilize.

Traders were also eyeing data on U.S. weekly jobless claims and manufacturing to be released later on Thursday, to gauge the strength of the economy and the outlook for the Fed's stimulus tapering plan.

The Fed said last month it will cut its $85 billion in monthly asset purchases by $10 billion. The next policy meeting is scheduled for January 28-29, when markets speculate there will be another cut if the economy continues to improve.

"With (the meeting) next week and people expecting more tapering, it is hard to go long gold," said another gold trader.

Platinum eased from a 2-1/2 month peak hit on Monday. Half of global platinum output is set to grind on Thursday as South Africa's Association of Mineworkers and Construction Union vowed to go ahead with a strike over pay.

blog comments powered by Disqus
most popular on facebook
talking point on sify finance