Gold remained under pressure on Tuesday morning, with investors seeking returns elsewhere such as in the dollar and equities.
The spot gold price was last at $1,157.50/1,158.50 per ounce, down $4.70 on Monday’s close. Silver followed gold lower to $15.64/15.68, down seven cents and around two-month lows.
“The outlook for precious metals at present is becoming increasingly gloomy,” Commerzbank said in a note. “Gold is facing headwind from the very firm US dollar, higher US bond yields and rising equity markets. Speculative financial investors are also likely to have retreated further from the gold market.”
The market seems to have dismissed fears about the eurozone – the ECB has this week rolled out a 60-billion euro-per month quantitative easing programme in a bid to prop up its ailing economy.
This has helped to push the euro to fresh 11-year lows against the dollar, with the two currencies approaching parity – the greenback was last at 1.0749, close to intraday lows of 1.0734 and down four-fifths of a cent.
Gold sank on Friday after the release of better-than-forecast US jobs data that increased the likelihood the Federal Reserve will raise interest rates from near-zero levels in the near term.
“Prices have not been this low since the short-lived shakeout after the Swiss gold referendum at the end of November,” FastMarkets analyst William Adams said.
“But given that US rate rises and a strong dollar have been on the agenda a long time, we are surprised by the extent of gold’s reaction, especially as the downward spirals in many currencies could well create risks of their own,” he added.
And although European equities are slightly softer this morning after Dutch finance minister and Eurogroup president Jeroen Dijsselbloem told Greece to accelerate its economic reforms, the FTSE 100 is only down 1.6 percent on its all-time high of 6,974.26, which it hit a week ago.
In data, Chinese figures released over night were mixed. Its PPI fell 4.8 percent, more than the expected 4.3 percent and the worse reading since December 2009. But the country’s CPI surprised to the upside, increasing 1.4 percent, better than the forecast 1.0 percent.
In other data already released, French industrial production came in better than expected, rising 0.4 percent, while Italian industrial production disappointed at -0.7 percent.
To come from the US are the NFIB small business index, Jolts job openings and wholesale inventories.
In the other metals, platinum was last at $1,132/1,137 per ounce, down $13 and at a fresh five-year low, while palladium at $807/813 was $10 lower.
(Editing by Mark Shaw)
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