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London - Gold slid to its lowest level since mid-January on Thursday, weighed by dollar strength, with the market having unwound all of the premium built up on expectations for further US quantitative easing.
Spot gold was down 1% at $1 632.76 an ounce in afternoon trade. The metal earlier hit a low of $1 627.68 - its weakest since January 13 - extending losses seen when the Federal Reserve upgraded its US economic outlook and fuelled the idea of being done with injecting further liquidity into the system.
US gold futures were down $18.70 at $1 631.50. Losses in spot silver outpaced those in gold, with the metal shedding 2.5% to $31.30/oz.
The dollar extended gains versus the euro as US jobless claims data offered evidence the jobs market recovery was gaining traction. A stronger US currency can make dollar-priced gold less attractive to non-US investors.
The single currency was also hit by unexpected declines in eurozone manufacturing and services activity in March, dented by a sharp fall in French and German factory activity.
Analysts expected that with a reassessment of global economic health, including slightly improved US data, gold prices might give way further.
“Right now we think this short-term trend lower could have further to go. Sentiment in the market seems to have turned a little bit bearish over the last couple of weeks, and I wouldn’t be surprised to see gold have a look below the 1 600 level,” said Credit Suisse analyst Tom Kendall.
Key to the change in sentiment for bullion was a recent shift in sentiment towards US monetary loosening, with a third round of quantitative easing seen as off the cards for now.
“All the people who piled in back in January when the Fed went very public on low interest rates... that has all been unwound now,” said Simon Weeks, head of precious metals at Scotia Mocatta.
Stock markets were struggling, with MSCI’s main world equity index down 0.7%.
Physical market muted
Asia’s physical market was muted with interest sparse, traders said. Weak Chinese manufacturing activity, showing the overall rate of contraction accelerating and new orders sinking to a four-month low, also fanned concerns about China’s retail gold appetite.
“People are concerned about China’s economic growth. If growth slows down and inflation eases, people may choose not to buy gold,” said a Hong Kong-based gold dealer.
In India, the world’s largest gold consumer, jewellers have been closed since the weekend in protest against an import duty hike on bullion.
The recent economic optimism helped platinum regain its premium over gold earlier in the month. But the spread flipped to a discount again this week, with gold standing roughly $19 above platinum.
Spot platinum traded down 1.6% to $1 607.24/oz, and spot palladium dropped 3.6% to $655.97.
Spot gold was down 1% at $1 632.76 an ounce in afternoon trade. The metal earlier hit a low of $1 627.68 - its weakest since January 13 - extending losses seen when the Federal Reserve upgraded its US economic outlook and fuelled the idea of being done with injecting further liquidity into the system.
US gold futures were down $18.70 at $1 631.50. Losses in spot silver outpaced those in gold, with the metal shedding 2.5% to $31.30/oz.
The dollar extended gains versus the euro as US jobless claims data offered evidence the jobs market recovery was gaining traction. A stronger US currency can make dollar-priced gold less attractive to non-US investors.
The single currency was also hit by unexpected declines in eurozone manufacturing and services activity in March, dented by a sharp fall in French and German factory activity.
Analysts expected that with a reassessment of global economic health, including slightly improved US data, gold prices might give way further.
“Right now we think this short-term trend lower could have further to go. Sentiment in the market seems to have turned a little bit bearish over the last couple of weeks, and I wouldn’t be surprised to see gold have a look below the 1 600 level,” said Credit Suisse analyst Tom Kendall.
Key to the change in sentiment for bullion was a recent shift in sentiment towards US monetary loosening, with a third round of quantitative easing seen as off the cards for now.
“All the people who piled in back in January when the Fed went very public on low interest rates... that has all been unwound now,” said Simon Weeks, head of precious metals at Scotia Mocatta.
Stock markets were struggling, with MSCI’s main world equity index down 0.7%.
Physical market muted
Asia’s physical market was muted with interest sparse, traders said. Weak Chinese manufacturing activity, showing the overall rate of contraction accelerating and new orders sinking to a four-month low, also fanned concerns about China’s retail gold appetite.
“People are concerned about China’s economic growth. If growth slows down and inflation eases, people may choose not to buy gold,” said a Hong Kong-based gold dealer.
In India, the world’s largest gold consumer, jewellers have been closed since the weekend in protest against an import duty hike on bullion.
The recent economic optimism helped platinum regain its premium over gold earlier in the month. But the spread flipped to a discount again this week, with gold standing roughly $19 above platinum.
Spot platinum traded down 1.6% to $1 607.24/oz, and spot palladium dropped 3.6% to $655.97.
