Gold prices fell Monday, following last week’s 7 percent drop, weighed down by a stronger U.S. dollar and increasing fears over an early end to the Federal Reserve’s stimulus efforts.
The metal sank back towards a three-year low hit last week in a sharp sell-off triggered when the Fed said it would cut back its stimulus by mid-2014, which supported interest rates and therefore made gold comparatively less attractive.
Spot Gold was down 1% at $1283.68 per ounce at 11:52 a.m. ET (15:52 GMT), after suffering the worst weekly performance since September 2011 last week, which saw gold drop as low as $1268.89 per ounce.
Gold is down around 24% so far this year.
The dollar traded near its highest in nearly three weeks against a basket of currencies, bolstered by expectations the Fed was considering scaling back its $85 billion monthly bond purchases.
The Fed`s remarks helped push up the benchmark 10-year U.S. Treasury yield to its highest in almost two years at above 2.5 percent.
Given that gold pays no interest, the rise in returns from U.S. bonds and other markets is seen as a negative signal.
Gold was also hurt as interest rates for short-term funds in China rose to extraordinary levels last week after big commercial banks held back on lending in the interbank market.
Bullish Outlook cut
Hedge funds and money managers slashed their bullish bets in gold futures and options for a second consecutive week to the lowest level in a month, a report by the Commodity Futures Trading Commission showed.
Holdings in SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, fell a further 0.54 percent to 989.94 tonnes on Friday, the lowest in over four years.
Goldman Sachs cut its year-end 2013 gold price forecast to $1,300 an ounce from $1,435.
Source: ForextribeThe metal sank back towards a three-year low hit last week in a sharp sell-off triggered when the Fed said it would cut back its stimulus by mid-2014, which supported interest rates and therefore made gold comparatively less attractive.
Spot Gold was down 1% at $1283.68 per ounce at 11:52 a.m. ET (15:52 GMT), after suffering the worst weekly performance since September 2011 last week, which saw gold drop as low as $1268.89 per ounce.
Gold is down around 24% so far this year.
The dollar traded near its highest in nearly three weeks against a basket of currencies, bolstered by expectations the Fed was considering scaling back its $85 billion monthly bond purchases.
The Fed`s remarks helped push up the benchmark 10-year U.S. Treasury yield to its highest in almost two years at above 2.5 percent.
Given that gold pays no interest, the rise in returns from U.S. bonds and other markets is seen as a negative signal.
Gold was also hurt as interest rates for short-term funds in China rose to extraordinary levels last week after big commercial banks held back on lending in the interbank market.
Bullish Outlook cut
Hedge funds and money managers slashed their bullish bets in gold futures and options for a second consecutive week to the lowest level in a month, a report by the Commodity Futures Trading Commission showed.
Holdings in SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, fell a further 0.54 percent to 989.94 tonnes on Friday, the lowest in over four years.
Goldman Sachs cut its year-end 2013 gold price forecast to $1,300 an ounce from $1,435.
