According to Reuters, May 15, gold dropped for five straight sessions on Wednesday, hitting a three-week low as the USD getting stronger to a six-week high against the euro after weak euro zone data.
Whereas gold has recovered about 7% from a two-year rack of $1.321.35 an ounce hit in mid-April, its safe-haven request has been beaten by record-high U.S. equities and indications of an improvement in the U.S. economy.
Spot gold dropped 0.8% to reach $1,414.56 an ounce at 1000 GMT; touching its lowest since April 23 at $1,408.19 earlier. Bullion was heading to post a daily drop for five consecutive sessions, its longest run of losses since January 2011. It has decreased more than 14% so far in 2013 after gaining for the past 12 years.
Gold U.S. futures for June dropped by 0.8% to reach $1,413.70 an ounce.
VTB Capital analyst Andrey Kryuchenkov stated “The dollar is very robust and seems poised for more strength in the coming months, adding further pressure to technically weak gold prices,”
The USD increased to a six-week high versus the euro after unexpectedly weak first-quarter economic development numbers from Germany and France, whereas European shares were mixed.
Analysts said that while a weak European growth outlook gives the opportunity for another interest rate cut by the European Central Bank, the U.S. economy showing a sign of a recovery underpins expectations that the Federal Reserve might rest its asset purchases program by the end of the year.
Kryuchenkov stated “The U.S. economy is not out of the woods yet but is so much better than anywhere else and monetary expansion should continue in Europe for longer than in the United States,”
As an estimate of investor sentiment, holdings at SPDR Gold Trust, the largest gold-backed ETF, were unaffected at 33.8 million ounces on Tuesday, but still in scene of their lowest hit earlier since March 2009.