Gold tumbles as investors lose faith in metals
Gold fell to the lowest level since July after signs of a strengthening US economy fuelled speculation that the Federal Reserve is ready to slow the pace of its monetary stimulus. Silver also fell.
Futures in New York fell as much as 2.1pc to $1,224.60 an ounce, the lowest since July 8. US manufacturing unexpectedly accelerated in November at the fastest pace in more than two years, the Institute for Supply Management's factory index showed. Bullion dropped 5.5pc in November.
Gold is heading for the first yearly retreat since 2000, and silver is poised for the worst rout in three decades. Some investors lost faith in precious metals as a store of value as global equities rallied and inflation failed to accelerate.
Global holdings in exchange-traded products backed by bullion tumbled 30pc this year to the lowest since March 2010, erasing $69bn from the value of the assets.
"The Fed is getting more and more evidence that it can start slowing the stimulus gas pedal," said David Lee, a vice-president at Heraeus Precious Metals Management in New York. "Manufacturing numbers show that the world recovery is in place."
Gold futures for February delivery fell 1.9pc to $1,226.50 in late morning in New York, heading for the biggest drop since October 11. (Bloomberg)