Gold price sinks to more than five-year low

Gold had already slid on Friday on the back of the strong dollar, which soared last week after U.S. Federal Reserve chief Janet Yellen reaffirmed expectations of an interest rate hike by year-end (File Photo: AP)

Gold slumped Monday to the lowest point in nearly five and a half years, weighed down by reports of massive selling in China, dealers said.

The precious metal tumbled to $1,072.35 in Asian deals, striking the lowest point since Feb. 11, 2010, and breaching the key psychological barrier of $1,100.

“The price slide was triggered by high selling volumes on the gold exchange in Shanghai,” said Commerzbank analysts in a research note to clients.

Dealer Nick Rose, at trading firm TradeNext, agreed that the latest price slump was sparked by Chinese sellers offloading large quantities of the metal.

Gold had already slid on Friday on the back of the strong dollar, which soared last week after U.S. Federal Reserve chief Janet Yellen reaffirmed expectations of an interest rate hike by year-end.

A stronger greenback makes dollar-denominated commodities more expensive for buyers using weaker currencies. That tends to dent demand and, in turn, pull prices lower.

Prices were hit Friday by news that China’s official gold reserves rose almost 60 percent over the past six years, according to the first official data on the subject since 2009.

The central People’s Bank of China (PBoC) said bullion holdings rose 57 percent to 1,658 tons as of the end of June, from 1,054 tons in April 2009, the last time a figure was released.

“Markets have commenced the week with an unexpected start following a spectacular drop in gold during the Asian session that sent the yellow metal to a new milestone five-year low,” added analyst Jameel Ahmad at traders FXTM on Monday.

“Gold dropping so sharply is a surprise and while the reports that China gold reserves were half the expected level might have inspired additional selling pressure, it is the repeated comments of commitment from the Federal Reserve that they will begin raising U.S. interest rates at some point this year that have continuously pressured gold in recent months.”

Other precious metals also forged multi-year lows on Monday.

Silver dived to $14.54 per ounce, the lowest level in nearly six years.

Platinum sank to a six-year trough at $946.25 an ounce, while sister metal palladium slid to $603.95 per ounce - last witnessed on November 11, 2012.

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Last Update: Wednesday, 20 May 2020 KSA 09:48 - GMT 06:48
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