Gold price slides to lowest since Brexit vote
New York (Oct 4) Gold slid more than 1 percent on Tuesday to its lowest since Britain's shock vote to leave the European Union in June, as a bounce in the dollar after upbeat U.S. data triggered a break of key support at $1,300 an ounce.
Forecast-beating U.S. manufacturing data on Monday stoked expectations that the Federal Reserve will lift interest rates by year-end, driving the dollar higher and weighing on gold.
A break of support at $1,300, which had arrested the metal's August decline, led to a flurry of selling that took prices to a three-month low of $1,288.26 an ounce, a level not seen since June 24 in the immediate aftermath of the UK's Brexit vote.
Spot gold was down 1.7 percent at $1,289.17 an ounce by 1335 GMT, while U.S. gold futures for December delivery were down $22.30 an ounce at $1,290.40.
The move was caused by "continued dollar strength, and traders looking for stops below such a big level," Saxo Bank's head of commodity research Ole Hansen said. "You can argue that considering the importance of the level, the weakness seen so far has been relatively modest."
Gold had traded between $1,300 and $1,350 for the last six weeks.
Traders are now turning their attention to U.S. payrolls data for September, due at the end of the week.
While Monday's data showing U.S. factories ramped up activity in September fuelled speculation that the Fed would lift rates at its December meeting, officials remain cautious.
The U.S. central bank would probably not be able to cut interest rates as aggressively as the last time around if it were faced with a recession in the next few years, New York Fed President William Dudley said on Monday. Chinese markets being shut for the Chinese National Day holidays from Oct. 1-9 kept a lid on physical gold demand. A drop in prices may spark some more interest from physical gold buyers, Afshin Nabavi, head of trading at MKS, said.
"The physical guys are looking for lower numbers," he said. "Between now and February is the time for the physical market to get busy."
Silver was down 2 percent at $18.35 an ounce. Platinum was down 0.9 percent at $995 an ounce, off an earlier three-month low of $991, while palladium was down 1 percent at $704.50 an ounce.
Source: Reuters
