May 16, 2013 / 4:16 AM / 4 years ago

PRECIOUS-Gold hits 1-month low, eyes longest downturn since 2009

4 Min Read

* Spot gold down sixth session in a row
    * Gold has dropped nearly 18 pct this year
    * Coming Up: U.S. weekly jobless claims at 1230 GMT

 (Recasts, updates prices)
    By A. Ananthalakshmi
    SINGAPORE, May 16 (Reuters) - Gold dropped to its weakest
level in almost a month on Thursday, hurt by a firmer dollar and
as holdings in exchange-traded funds fell to the lowest in over
four years, potentially stretching bullion's losing streak to a
sixth day.
    If gold ends lower on the day, it would be its longest
losing streak since March 2009. The drops have already helped to
fuel another scramble for bullion that has push Asian premiums
for physical gold to record highs. 
    Spot gold fell to as low as $1,374.99 an ounce, its
cheapest since April 18. By 0748 GMT, it was down 1 percent at
$1,378.36.
    Gold is less than $60 away from two-year lows hit in
mid-April. Prices have fallen nearly 18 percent this year and
are well below a record top near $1,920 struck in September
2011.
    "The recent stronger profile of the U.S. dollar has
undermined some of the financial investments side of buying
gold," said Tim Riddell, head of ANZ Global Markets Research,
Asia. A stronger greenback makes dollar-denominated commodities
more expensive for holders of other currencies. 
    Financial markets are also rife with speculation that the
U.S. Federal Reserve may begin winding down its aggressive
economic stimulus, undermining the argument for holding gold as
a hedge against potential inflation.
    Buying in China, the world's No. 2 consumer after India, has
helped limit price losses.
    China bought a large amount of gold on Thursday morning
after prices fell by more than $20 overnight, said Peter Tse,
director at ScotiaMocatta in Hong Kong.
    Premiums for gold bars rallied to all-time highs in Hong
Kong - China's main source for gold imports - after bullion's
steepest drop since its April sell-off fuelled another round of
buying, according to dealers. 
    Gold bars in Hong Kong fetched premiums of up to $5 an ounce
over spot London prices, up from $3 an ounce last week.
 
    Gold investment nearly halved in the first quarter as a
brighter view of the U.S. economy prompted investors in the West
to favour other assets like stocks over bullion, the World Gold
Council said on Thursday. 
    A drop in ETF holdings indicates that investors are shifting
to equities from gold. Holdings in SPDR Gold Trust, the
world's largest gold-backed ETF, fell 0.43 percent to 1047.14
tonnes on Wednesday, the lowest since March 2009. 
    U.S. gold for June delivery stood at $1,377.20 an
ounce, down 1.4 percent.
        
  Precious metals prices 0748 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1378.36  -13.93   -1.00    -17.69
  Spot Silver        22.33   -0.24   -1.06    -26.25
  Spot Platinum    1471.49  -14.51   -0.98     -4.14
  Spot Palladium    716.47   -8.03   -1.11      3.54
  COMEX GOLD JUN3  1377.20  -19.00   -1.36    -17.82        47656
  COMEX SILVER JUL3  22.33   -0.33   -1.45    -26.13         9811
  Euro/Dollar       1.2861
  Dollar/Yen        102.47
 
  COMEX gold and silver contracts show the most active months
    

 (Editing by Lewa Pardomuan and Tom Hogue)

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