Gold hits 10-month low on selloff to cover equity losses

Friday, 5 April 2013 03:46 - - {{hitsCtrl.values.hits}}

Reuters: Gold dropped to a 10-month low on Thursday as investors cashed in the precious metal to cover steep losses in equities after disappointing US economic data.

Gold, a traditional safe haven, also failed to capitalise on tensions in the Korean peninsula, where North Korea has moved what appears to be a mid-range missile to its east coast, according to South Korea’s Yonhap news agency.

Gold fell as far as $1,541.14 an ounce, its lowest since May, and stood at $1,551.61 by 0557 GMT, down $5.74. It rallied to a one-month peak in March on worries about fiscal stability in Europe, as politicians scrambled to clinch a bailout for Cyprus.

“The environment for gold is pretty bearish now. I think if gold tests the lower trend channel, it has the potential to drop to the $1,530 level,” said Joyce Liu, an investment analyst at Phillip Futures in Singapore.

“As for North Korea, I think investors are seeing the threats more like a joke. They are not reacting as if North Korea is really going to launch a nuclear-loaded missile. Funds are moving out of gold because there’s less need for a safe haven.” US gold for June delivery fell $2.20 an ounce to $1,551.30, while other precious metals also dropped sharply. Silver tumbled to its lowest level since July last year, platinum dropped to its lowest since late August, and thinly-traded palladium was at a two-week trough. Tokyo gold futures declined as much as 2.1% before paring some losses as the weaker prices ignited buying from speculators in Japan. Premiums for gold bars in Tokyo edged up to 50 cents an ounce to spot London prices from zero earlier this week.

“The general public is buying. But I don’t think the Japanese people have much interest in the developments in North Korea,” said a physical dealer in Tokyo.