You are here
Gold heads for longest weekly losing streak in 16 years
[MANILA] Gold slipped to near 5-1/2-year lows on Friday and was on course for a sixth straight weekly fall, its longest retreat since 1999, after upbeat US economic data strengthened expectations for a near-term hike in interest rates.
Bullion was also set to end July with its biggest monthly decline in more than two years after a deep rout last week further shook investor confidence, with more losses seen ahead.
The July 20 selloff saw gold trip more than 3 per cent, encouraging more investors since then to trim their holdings that pulled the global spot benchmark to US$1,077 days later, its lowest since February 2010.
Spot gold was down 0.3 per cent at US$1,084.60 an ounce by 0240 GMT, and has dropped more than 1 percent for the week. Bullion has lost 7.5 per cent so far for the month, its steepest since June 2013.
Data on Thursday showed the US economy grew 2.3 per cent in the second quarter, less than the 2.6 per cent estimated in a Reuters poll, although first-quarter gross domestic product was revised to show growth of 0.6 per cent instead of a contraction.
That reinforced expectations the Federal Reserve is on track to raise interest rates, possibly at its next meeting in September, buoying the dollar and hurting gold anew.
The data came after the Fed's policy meeting this week at which it concluded that the world's largest economy is"expanding moderately." "That big overhang is enough to keep gold trading at low levels," said Argonaut Securities analyst Helen Lau, referring to the looming US rate increase.
Waning investment demand and weak physical appetite for gold also pose further downside risk for prices, said Lau. "Despite trading at multi-year lows, physical demand has been on the low side with premiums in China and India hardly moving," MKS Group trader Jason Cerisola said in a note.
A potential hike in US interest rates dims the appeal of non-interest bearing assets such as gold.
US gold for August delivery dropped 0.4 per cent to US$1,083.80 an ounce.
The Fed will not need to see balanced risks to the economy to proceed with an interest rate hike in September, according to former Fed officials and a review of central bank statements through recent turns in policy.
In other metals, spot platinum and palladium were slightly weaker and not far off multi-year lows, while silver was steady.