Gold losing its glitter
Gold steadied yesterday after falling to its lowest since August 2010 but stayed on track to post its worst quarter on record as fears persisted that the US Federal Reserve will wind down its monetary stimulus soon.
Bullion has taken a beating – losing as much as 15pc or about $200 an ounce – since the beginning of last week when Fed chairman Ben Bernanke laid out a strategy to roll back the bank's $85bn (€65.2bn) monthly bond purchases in a recovering economy. This would support an increase in interest rates, making gold comparatively less attractive.
The lower prices have failed to rekindle physical demand in Asia, traditionally the biggest buyer of gold.
"The question now emerges as to whether we are going to see further unwinding of speculative positions or whether the activity of bargain hunters is going to provide support, but the risks are still very much to the downside," Mitsubishi analyst Jonathan Butler said.
"Anything that comes out as confirming what the FOMC (Fed committee) has already set out – that is a moderate improvement in economic unemployment conditions – is going to be bearish gold and probably other precious metals too."