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Singapore - Gold held a two-day drop as investors cut wagers on a bullion rally and reduced assets in exchange-traded products backed by the metal.
Bullion for immediate delivery rose 0.2% to $1 339.05 an ounce at 11.42am in Singapore, according to Bloomberg generic pricing. The metal lost 0.8% in the previous two sessions to pare this year’s advance to 26%.
After stunning gains to start the year, bullion’s beginning to lose its momentum. Prices have dropped about 1% in August as the US economy picks up steam, damping demand for a haven. As interest in equity markets took off, with three US stock benchmarks grinding to fresh highs last week, hedge funds and other speculators cut their bets on a bullion rally for the fourth time in five weeks.
Gold investors have been disappointed as stimulus measures globally have been limited, both in terms of scope and size, said Mark To, head of research at Wing Fung Financial Group, a trader and refiner in Hong Kong. “There’s been a stronger urge to test the support recently. For the short term, it is still likely to fall below $1 300,” he said.
Holdings in bullion-backed ETPs declined by 13 metric tons to 2 026.9 tons on Friday, data compiled by Bloomberg show. The assets shrank 0.6% last week, the biggest decline in percentage terms in 2016, according to the data.
Fed outlook
Still, the potential anchor on prices of another Federal Reserve rate increase has receded after the US posted zero retail sales growth in July on Friday, causing market pricing for a hike in September to fall and the dollar to touch its lowest level since June.
“The Fed is more likely to delay its rate hike until December,” Wing Fung’s To said. While falling in the short term, gold may break through $1 400 to approach $1 500 by the year-end, he said.
The net-long position in gold futures and options fell 4.3% to 255 773 contracts in the week ended August 9, according to Commodity Futures Trading Commission data released three days later. The holdings have dropped 11% since July 5, when they reached an all-time high of 286 921.
In China, bullion of 99.99% purity was little changed at 286.7 yuan a gram ($1 341.38 an ounce) on the Shanghai Gold Exchange. Silver, platinum and palladium advanced on global markets.
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