GOLD prices slipped to a three-week low in Europe yesterday, testing technical support above 1030 an ounce, as the dollar index edged higher, eroding interest in the precious metal as an alternative asset.
The precious metal is also suffering from weakness in physical demand, with the world’s largest gold exchange- traded fund reporting a second daily outflow on Tuesday, dealers said.
Spot gold was bid at 1033,10/oz , against 1038,80/oz late in New York on Tuesday. Earlier it touched a low of 1030,10/oz.
Analysts say this week’s price correction is not surprising, given the strength of its upward move since early September.
US gold futures for December delivery on the Comex division of the New York Mercantile Exchange fell to 1034. Reuters
an ounce. “Gold is behaving in textbook fashion,” Calyon metals analyst Robin Bhar told Reuters. “In any bull market you have to confirm support, and in this market, support is in the 1030 area, which was the previous high.” He said while interest in physical gold jewellery and ETFs was waning, possibly supporting the case for a further pullback, both this and the dollar rebound looked to be temporary.
“All the longstanding bull factors for gold — inflation, dollar weakness, unhappiness with the monetary system as it stands and what governments are doing to their paper currencies — are still there,” he said. “The uptrend remains intact.”
Gold has come under pressure from a rise in the dollar index, which gauges the US unit’s performance against a basket of six major currencies.
The dollar has benefited from a slide in global stock markets, which has prompted traders to cut risk exposure.
European shares hit a three-week low yesterday.
US equity futures fell, while world stocks also touched a three-week low, as investors worried about the pace of economic recovery after disappointing US consumer confidence data on Tuesday.
