Tags: gold | decline | economy | India

Gold Slips Below $1,400 on Economic Optimism

Wednesday, 15 May 2013 03:36 PM

 

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Gold slid below $1,400 an ounce, losing two percent and hitting its lowest in nearly a month as a record rally in U.S. equities and economic optimism undermined bullion's safe-haven appeal.

The metal fell for a fifth straight session for its longest daily losing streak since January 2011 as the S&P 500 hit a new all-time high and Wall Street has risen for four consecutive sessions.

"There is no reason to own gold as long as people keep on putting money into the stock market. You can see it everywhere that the economy is turning around," said Comex gold options floor trader Jonathan Jossen.

A pause in strong physical demand after news India restricted imports to cut a trading deficit also weighed on gold.

Spot gold dropped as much as 2.5 percent to $1,390.24, its lowest since April 19. It was down 2 percent at $1,396.94 an ounce by 2:09 p.m. EDT.

Analysts expect the fall below the psychologically significant $1,400 level could be a trigger for further heavy selling and might retest two-year lows of $1,321.35 an ounce hit on April 16. Wednesday's fifth consecutive daily fall would be its longest run of losses since January 2011. It has fallen around 15 percent so far in 2013 after gaining in each of the past 12 years.

U.S. Comex gold futures for June delivery settled down $28.30 at $1,396.20 an ounce, with trading volume on track to finish near its 30-day average, preliminary Reuters data showed. A stronger dollar and initial heavy losses in crude oil also weighed on gold. As a gauge of investor sentiment, holdings at SPDR Gold Trust, the largest gold-backed ETF, were unchanged at 33.8 million ounces on Tuesday, but still within sight of their lowest since March 2009 hit earlier.

Gold buying in India came to a halt as the country's central bank restricted imports after a surge in buying in April sent the trade deficit to $17.8 billion for the month, up more than 72 percent from March. India's gold and silver imports surged 138 percent on the year in April as customers took advantage of lower prices, increasing pressure on the current account balance and limiting the space for monetary easing.

© 2014 Thomson/Reuters. All rights reserved.

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