Gold price hits 1-month low,eyes longest downturn since 2009

Gold price hits 1-month low,eyes longest downturn since 2009

Spot gold down sixth session in a row; gold price has dropped nearly 18 pct this year.

Gold price dropped to its weakest level in almost a month on Thursday,hurt by a firmer dollar and as holdings in exchange-traded funds fell to the lowest in over four years,potentially stretching bullion’s losing streak to a sixth day.

If price gold ends lower on the day,it would be its longest losing streak since March 2009. The drops have already helped to fuel another scramble for bullion that has push Asian premiums for physical gold to record highs. Spot gold fell to as low as $1,374.99 an ounce,its cheapest since April 18. By 0748 GMT,it was down 1 percent at $1,378.36.

Gold is less than $60 away from two-year lows hit in mid-April. Prices have fallen nearly 18 percent this year and are well below a record top near $1,920 struck in September 2011.

“The recent stronger profile of the U.S. dollar has undermined some of the financial investments side of buying gold,” said Tim Riddell,head of ANZ Global Markets Research,Asia. A stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies. Financial markets are also rife with speculation that the U.S. Federal Reserve may begin winding down its aggressive economic stimulus,undermining the argument for holding gold as a hedge against potential inflation.


Buying in China,the world’s No. 2 consumer after India,has helped limit price losses. China bought a large amount of gold on Thursday morning after prices fell by more than $20 overnight,said Peter Tse,director at ScotiaMocatta in Hong Kong.

Premiums for gold bars rallied to all-time highs in Hong Kong – China’s main source for gold imports – after bullion’s steepest drop since its April sell-off fuelled another round of buying,according to dealers.

Gold bars in Hong Kong fetched premiums of up to $5 an ounce over spot London prices,up from $3 an ounce last week.

Gold investment nearly halved in the first quarter as a brighter view of the U.S. economy prompted investors in the West to favour other assets like stocks over bullion,the World Gold Council said on Thursday.

A drop in ETF holdings indicates that investors are shifting to equities from gold. Holdings in SPDR Gold Trust,the world’s largest gold-backed ETF,fell 0.43 percent to 1047.14 tonnes on Wednesday,the lowest since March 2009.