Metal Commodities
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Gold prices edged up on Monday on short covering after a
dollar rise and technical selling sent the precious metal into its
weakest since early January earlier in the day.
Silver also nearly erased earlier losses after falling to a four-year low, with the prospect of rising U.S. interest rates undermining precious metals and industrial commodities dented by worries over Chinese demand.
Caught on both counts with dual roles as an industrial metal, widely used in electronics, and as an investment vehicle, silver had tumbled more than 3 percent in just 40 minutes in early Asian trade to hit its lowest since mid-2010 at $17.30 an ounce. By late morning it had recovered to $17.79 an ounce.
As well as a retreat in gold prices, which hit 8-1/2 month lows on Monday, weakness in other industrial metals had weighed on silver, analysts said. Sector bellwether copper hit a three-month low on Monday and other base metals retreated on demand concerns ahead of manufacturing data from top consumer China.
Losses were limited as the dollar took a breather after hitting four-year highs against a currency basket on Friday, and European stocks fell. However, more weakness is on the cards as gold presses down towards its June 2013 low at $1,180, dealers said.
Silver also nearly erased earlier losses after falling to a four-year low, with the prospect of rising U.S. interest rates undermining precious metals and industrial commodities dented by worries over Chinese demand.
Caught on both counts with dual roles as an industrial metal, widely used in electronics, and as an investment vehicle, silver had tumbled more than 3 percent in just 40 minutes in early Asian trade to hit its lowest since mid-2010 at $17.30 an ounce. By late morning it had recovered to $17.79 an ounce.
As well as a retreat in gold prices, which hit 8-1/2 month lows on Monday, weakness in other industrial metals had weighed on silver, analysts said. Sector bellwether copper hit a three-month low on Monday and other base metals retreated on demand concerns ahead of manufacturing data from top consumer China.
Losses were limited as the dollar took a breather after hitting four-year highs against a currency basket on Friday, and European stocks fell. However, more weakness is on the cards as gold presses down towards its June 2013 low at $1,180, dealers said.
Spot gold
edged higher to $1,216 an ounce, having earlier touched a low of
$1,208.36. U.S. gold futures for December delivery settled up 0.11
percent at $1217.90 an ounce.
Silver hit its lowest since June 2010 at $17.30 an ounce, and later continued to hold below $18 an ounce.
"Clearly there are those out there, with the Dow at record highs, who believe that recovery is here or on its way, and that the next move in interest rates is going to be higher—it's a question of when, rather than if," Simon Weeks, head of precious metals at the Bank of Nova Scotia, said.
Read MoreMetals malaise weighs on equity markets
"Overall the cycle is changing again. The all-time high for gold was back in 2011, and we haven't managed to make anything higher since then," he added. "If interest rates really do start to rise again, the producer community is going to be keener to sell."
The precious metals group has seen sharp losses in recent days as U.S. stocks rallied to record highs and the dollar index hit a 4-year peak on expectations the world's biggest economy will begin tightening rates sooner than expected.
Higher interest rates boost the opportunity cost of holding non-yielding gold. A drop in rates to record lows during the financial crisis was a key factor sending gold prices to a record $1,920.30 an ounce in September 2011.
Silver hit its lowest since June 2010 at $17.30 an ounce, and later continued to hold below $18 an ounce.
"Clearly there are those out there, with the Dow at record highs, who believe that recovery is here or on its way, and that the next move in interest rates is going to be higher—it's a question of when, rather than if," Simon Weeks, head of precious metals at the Bank of Nova Scotia, said.
Read MoreMetals malaise weighs on equity markets
"Overall the cycle is changing again. The all-time high for gold was back in 2011, and we haven't managed to make anything higher since then," he added. "If interest rates really do start to rise again, the producer community is going to be keener to sell."
The precious metals group has seen sharp losses in recent days as U.S. stocks rallied to record highs and the dollar index hit a 4-year peak on expectations the world's biggest economy will begin tightening rates sooner than expected.
Higher interest rates boost the opportunity cost of holding non-yielding gold. A drop in rates to record lows during the financial crisis was a key factor sending gold prices to a record $1,920.30 an ounce in September 2011.
"Fed policy will continue to be the enemy of gold bulls," Deutsche Bank
said in a weekly note. "In an environment where U.S. long term real
yields and the U.S. dollar keep rising, gold prices will remain under
pressure."
Gold erases gains for the year
Gold's recent losses have erased almost all of its 2014 gains, with the metal now up only 0.7 percent from last year, when it lost 28 percent of its value.
Investor interest has dipped. Holdings of the world's largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust , fell 7.78 tonnes to 776.44 tonnes on Friday, its lowest since December 2008.
Data from the Commodity Futures Trading Commission on Friday also showed that hedge funds and money managers switched silver into a net short position for the first time since mid-June.
Read MoreChange of tone by Fed dove Dudley may lift dollar
The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, spiked up to its highest since mid-2010 on Monday at 68.7 as silver underperformed.
"[Silver] continues to be in a downward channel currently, without any arguments for a sustained upward development," precious metals house Heraeus said in a note on Monday.
"ETF holdings have also experienced a small setback in the course of the past week. Instead of going bargain hunting, even Asia put itself on the selling side this morning."
Gold erases gains for the year
Gold's recent losses have erased almost all of its 2014 gains, with the metal now up only 0.7 percent from last year, when it lost 28 percent of its value.
Investor interest has dipped. Holdings of the world's largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust , fell 7.78 tonnes to 776.44 tonnes on Friday, its lowest since December 2008.
Data from the Commodity Futures Trading Commission on Friday also showed that hedge funds and money managers switched silver into a net short position for the first time since mid-June.
Read MoreChange of tone by Fed dove Dudley may lift dollar
The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, spiked up to its highest since mid-2010 on Monday at 68.7 as silver underperformed.
"[Silver] continues to be in a downward channel currently, without any arguments for a sustained upward development," precious metals house Heraeus said in a note on Monday.
"ETF holdings have also experienced a small setback in the course of the past week. Instead of going bargain hunting, even Asia put itself on the selling side this morning."
Related Securities
|
Price
|
Change
|
%Change
|
|
|---|---|---|---|---|
| .GDQ | 116.88 | -0.19 | -0.16% | |
| INTL | 17.75 | -0.15 | -0.84% | |
| SILV/USD | 17.73 | -0.03 | -0.17% | |
| USD INDEX | 84.71 | -0.02 | -0.02% | |
| BNS | 71.31 | -0.25 | -0.35% | |
| DBFBF | 0.00 |
---
|
UNCH | 0% |
| GLD | 116.9133 | -0.1767 | -0.15% | |
| .XXAU | 89.09 | -2.49 | -2.72% | |
| PLAT/USD | 1325.50 | -7.75 | -0.58% | |
| PALL/USD | 797.10 | -12.90 | -1.59% |
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