Gold Plummets On Global Cues, Profit Taking
Washington (Alliance News) Gold futures plummeted to end sharply lower on Monday, with investors on a profit-taking spree on recent gains made by the precious metal and the low physical demand. With appetite for riskier assets picking up, investors largely ignored geopolitical tensions amid rising equities.
Gold prices were also impacted after concerns over Portugal's banking industry eased, which had earlier prompted investors to seek the safe haven of the yellow metal.
Traders are also looking ahead to quarterly earnings reports and some crucial comments from central bank heads coming up later in the week.
Gold for August delivery, the most actively traded contract, plunged USD30.70 or 2.3% to close at USD1,306.70 an ounce on the Comex division of the New York Mercantile Exchange on Monday. This is biggest daily loss for gold in 2014.
Gold for August delivery scaled an intraday high of USD1,340.90 and a low of USD1,302.20 an ounce.
Gold futures gained 1.3% last week, as renewed worries about the European economy on recent weak data from France and Italy and concerns about Portugal's banking sector prompted investors to seek the safe haven of the precious metal.
Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, remained unchanged at 800.05 tons on Monday from its previous close.
The dollar index, which tracks the US unit against six major currencies, traded at 80.20 on Monday, up from its previous close of 80.19 late Friday in North American trade. The dollar scaled a high of 80.25 intraday and a low of 80.08.
The euro traded higher against the dollar at USD1.3611 on Monday, as compared to its previous close of USD1.3599 late Friday in North American trade. The euro scaled a high of USD1.3640 intraday and a low of USD1.3598 .
In economic news from eurozone, data from Eurostat showed eurozone industrial production to have declined 1.1% month-on-month in May, reversing the 0.7% rise in April. Economists expected output to drop 1.2%.
U.K 's business optimism was highest among developed nations in June amid weakening global sentiment. Business confidence in the UK , in terms of expected future activity, employment and investment, came in highest among the the G4 economies, though the measure eased from February's record high, a Markit Global Business Outlook survey showed.
Elsewhere, China's fiscal expenditure grew significantly in June as government increased spending to boost economic growth, data from the finance ministry showed Monday. Fiscal expenditure advanced sharply by 26.1% from a year ago to CNY 1.65 trillion in June. The annual growth was faster than the 24.6% increase seen in May. Fiscal revenues increased only 8.8% to CNY 1.3 trillion . In May, income was up 7.2%.
Japan's industrial output growth for May was revised upwards, final figures from the Ministry of Economy, Trade and Industry showed Monday. Final industrial production rose 0.7% month-on-month in May, which was more than the 0.5% increase estimated in the preliminary report on June 29 . In April, production grew 2.8%.
During the week, investors will be digesting a slew of economic reports including the data on consumer sentiment, retail sales, manufacturing sector activity and housing market, besides the weekly report on jobless claims.