Commodities – Gold drops to three-year low below $1,200
June 28, 2013 8:03 am
Gold has tumbled below the key $1,200 level, reaching as low as $1180.11 in early Asian trading hours on Friday. The precious metal has lost over 28 percent in value so far this year, affected by a stronger dollar.
The greenback has rebounded as a result of expectations of the Federal Reserve tapering stimulus. Until recently, gold was used by investors as a safe haven asset, to shield their assets from uncertainty in financial markets as well as bold monetary easing by central banks around the world.
Gold has reached its lowest level for the first time in nearly three years as investors continued their relentless selling, betting on the Fed to scale back its bond buying. Investors are shifting to the dollar as well as into equities.
Gold’s safe-haven appeal has been severely dented since Fed Chairman Ben Bernanke said last week the Fed plans to start cutting back spending later this year, based on its $85 billion monthly bond purchases program.
A reduction in bond buying would support an increase in interest rates, making gold less attractive.
US jobless data yesterday reinforced expectations that the economy continues to improve and the Fed will soon taper stimulus.
Meanwhile physical demand has also declined, as buying in top consumers India and China has not picked up as much.
Gold has tumbled below the key $1,200 level, reaching as low as $1180.11 in early Asian trading hours on Friday. The precious metal has lost over 28 percent in value so far this year, affected by a stronger dollar.
The greenback has rebounded as a result of expectations of the Federal Reserve tapering stimulus. Until recently, gold was used by investors as a safe haven asset, to shield their assets from uncertainty in financial markets as well as bold monetary easing by central banks around the world.
Gold has reached its lowest level for the first time in nearly three years as investors continued their relentless selling, betting on the Fed to scale back its bond buying. Investors are shifting to the dollar as well as into equities.
Gold’s safe-haven appeal has been severely dented since Fed Chairman Ben Bernanke said last week the Fed plans to start cutting back spending later this year, based on its $85 billion monthly bond purchases program.
A reduction in bond buying would support an increase in interest rates, making gold less attractive.
US jobless data yesterday reinforced expectations that the economy continues to improve and the Fed will soon taper stimulus.
Meanwhile physical demand has also declined, as buying in top consumers India and China has not picked up as much.
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