Gold tumbles through $1,300 on Fed move By Emiko Terazono and Jack Farchyin London ©AFP Gold tumbled more than 4 per cent to a 2½-year low and other commodity prices also slid after the US Federal Reserve signalled a scaling back of its monetary stimulus programme. The combination of a change of course from the Fed together with fresh signs of softer growth in China meant that commodities from palladium and copper to oil and coffee were among the hardest hit in a widespread market rout on Thursday. More Precious metals, already struggling as investors dump their holdings following a sharp price reversal this year, bore the brunt of the selling. Gold tumbled as much as 4.8 per cent to a 2½-year low of $1,285.90 a troy ounce while silver plunged by as much as 7.6 per cent and palladium dropped 5 per cent. UBS, a leading bullion bank, lowered its one-month gold target to $1,250 a troy ounce from $1,425 and its three-month forecast to $1,350 from $1,500. Joni Teves, UBS precious metals analyst, said the present environment was looking increasingly difficult for gold. “Slowing Fed asset purchases with the end now potentially in sight, higher yields, a stronger dollar and continued improvements in the economy are significant obstacles that perpetuate an already very weak investor sentiment,” she said. The shift in sentiment towards the precious metal has triggered a wave of selling by holders of gold-backed exchange-traded funds, whose rapid growth has been a major driver of gold’s bull market. The largest such fund, SPDR Gold Shares, on Wednesday saw its gold holdings drop below 1,000 tonnes for the first time since February 2009. The 23 per cent fall in gold prices has triggered a surge in physical demand in Asia. James Steel, precious metals analyst at HSBC in New York, said: “The slide in gold prices may trigger a positive demand response from price-sensitive buyers.” But few believe that will be enough to trigger a price rebound as long as investors continue to sell. Other commodities were pressured by Chinese manufacturing data, which showed activity at a nine-month low, and the tight credit conditions in the country. ICE August Brent crude fell 3 per cent to $103 a barrel; benchmark London Metal Exchange copper dropped to a 20-month low of $6,750 a tonne; aluminium fell below $1,800 a tonne and nickel dropped below $14,000 a tonne, the lowest prices for the two metals since 2009. ICE September arabica coffee fell to the lowest in nearly four years at $1.171 a pound.
Posted on: Fri, 21 Jun 2013 07:33:07 +0000
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