Gold takes a knock

SINGAPORE. – Gold fell more than 1 percent yesterday to close below US$1 300, as strong global economic data dented its safe-haven appeal and physical buying in top consumers India and China remained subdued. The metal rose early in Asian trading on a weaker dollar but failed to find support amid lacklustre demand in China, the second-biggest gold buyer.
Losses were made worse by technical selling once the price fell below the US$1 300 mark. Spot gold was down 0,9 percent at US$1 291,61 an ounce by 7.10am, hovering near a two-week low. It fell as much as 1,2 percent at one point.

“Once we break below US$1 300 and then US$1 295, it could go all the way to US$1 280,” one precious metals trader said in Hong Kong.
“There is nothing much to hold it up today as we have seen strong data, and physical demand is quiet.”

Growth in the US services sector rebounded from a three-year low, data showed on Monday, while British businesses boomed and activity at eurozone companies expanded, albeit modestly, in July for the first time in 18 months.

Gold has lost close to a quarter of its value this year on fears the US Federal Reserve will curb its commodities-friendly bond purchases on signs of economic recovery.
The Fed was nearer to dialling back its massive bond-buying programme after the unemployment rate dropped last month, Dallas Fed president Richard Fisher said on Monday.

Gold hit a two-week low of US$1 282,69 on Friday on strong US economic growth and robust factory activity. However, it rebounded after a weak jobs report.
“There is not much technical support further down until US$1 284,” ANZ analysts said in a note yesterday.

Gold importers in top bullion consumer India stayed on the sidelines for a third straight week due to policy uncertainty on shipments and supporting premiums.
In China, demand has fallen off in recent weeks, dealers say, as indicated by falling premiums. Gold prices on the Shanghai Gold Exchange fell 1,4 percent yesterday.

Premiums to London spot prices in Hong Kong – a key supplier to China – have fallen to about US$3-$4 an ounce, dealers said, from US$5 two weeks ago. Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0,2 percent to 917,14 tonnes on Monday. – Reuters.