{{Gold fell to a near three-year low on Wednesday, tumbling nearly 4% as a rally in the equity markets further weighed down on bullion’s investment appeal as a hedge against economic uncertainty. }}
Silver dropped almost 5% and platinum group metals also declined sharply.
Bullion was pummelled despite some easing fears that the US Federal Reserve would begin to withdraw its stimulus early after the US government slashed its estimate for first-quarter economic growth.
“We bought gold for two reasons – because we were worried about the inflationary impact of policy and because we thought the financial system was going to fall apart,” said Sean Corrigan, chief investment strategist at Diapason Commodities Management.
“Although it may be completely the wrong judgement, the market has decided that none of those at the moment is a concern,” Corrigan said.
Spot gold earlier slumped to its lowest since August 2010 at $1 223.54 an ounce. It was last down 3.6% at $1 230.31 an ounce by 17:17 GMT.
Bullion has now lost $120 in the last four sessions after the Fed last week gave its most explicit signal yet it plans to wind down the era of easy money.
US gold futures for August delivery dropped $45.10 to $1 230, with trading volume approaching 300 000 lots versus its 30-day average at 211 000, preliminary Reuters data showed.
The metal has lost more than a quarter of its value this year and by around 23% in the second quarter, its biggest quarterly loss since Reuters began tracking gold prices in 1968.
US stocks advanced for a second straight day on hopes that the worse-than-expected US GDP data might delay the Fed in scaling back its stimulus, a key factor behind gold’s rally in recent years.
“Equities are up again. People want risk-on and gold is therefore seen as a source of cash and not as a safe haven, because that’s not needed,” said Simon Weeks, head of precious metals at the Bank of Nova Scotia.
Silver fell to its lowest since August 2010 at $18.39 an ounce. Spot prices were later down 4.5% at $18.71 an ounce.
{wirestory}
Leave a Reply