(Reuters) – Gold fell to its lowest in 2 and half months on Tuesday, breaching key support at its August lows as equities markets rose and also the U.S. dollar made a 1-year high against the Euro prior to the European head financial institution, the ECB, meeting this week.
Gold has been under pressure due worries over the stand-off between the West and Russia. Moreover, the state and protracted unrest within the Middle East didn’t settle down yet. However strength in stock markets and the U.S. dollar, and weaker physical demand from China and India, countered the safe-haven demand on gold.
Simon Weeks, head of precious metals at the Bank Nova Scotia, said that gold has struggled for quite a bit, reconciliation government problems against incomparable high stock markets.
Weeks adds that its clearly, plenty of individuals have already got a hedge on board against the world’s governments situation, and physical demand does not appear notably sensible as China and India simply are not aggressively buying within the approach individuals may expect as before. Also, the threat of increased interest rates is a lot of seemingly to encourage producers to be sellers once more. It simply does not look encouraging for the gold bulls.
Spot gold was lower by 1.2 % to be traded at $1,271.31 an oz., having earlier hit its lowest mid-June at $1,268.20. Comex U.S. gold futures for December delivery were $15.40 lower at $1,272.
Selling picked up when the metal stone-broke through support level at $1,273.06 an oz., its Aug. 21 lows.
European shares rose 0.3 % on Tuesday as investors wait the ECB’s policy call later on before chasing stocks higher.
Stock markets have rallied recently following pacifistic comments by ECB President Mario Draghi, that sparked bets that the financial institution is making ready to pump a lot of liquidity into the system, presumably via purchases of state or company bonds, a program called quantitative easing (QE).