Gold price falls amid commodities sell-off across the board
San Francisco (Aug 3) Gold prices have fallen as investors cut positions in the precious metal amid a sell-off in commodities.
Gold for December delivery, the most actively traded contract, closed down 0.5 per cent to $US1,089.40 a troy ounce on the Comex division of the New York Mercantile Exchange.
Prices for raw materials tumbled again Monday, as worries persisted of weak demand from top consumer China, amid ample supply of commodities world-wide. The S&P GSCI, an index that tracks the performance of 24 commodities, tumbled to a fresh six-year low amid falling prices for everything from oil to base metals and sugar.
In addition, gold prices are being pressured by a looming rate increase from the Federal Reserve, which is expected to tighten borrowing costs as early as September. Gold pays its holders nothing and struggles to compete with yield-bearing investments when rates rise.
Some market watchers believe gold prices have more room to fall.
"Considering that the US economy is recovering and that we will likely see a decent US employment data throughout the summer, selling gold rallies any time gold shoots above $US1,100 an ounce seems like an appropriate trading strategy for now," Bart Melek, head of commodities strategy at TD Securities, said in a note to clients.