Gold extended losses to trade near its lowest since March on Wednesday as its allure as a safe-haven asset took a hit despite the Greek debt crisis and the tumble in Chinese stock markets.
Other precious metals took cues from gold, also logging sharp losses as the dollar grew more robust.
Global financial markets have been rattled by the Greek crisis that could see Athens leave the euro zone. Adding to those jitters is the sharp sell-off in Chinese stock markets.
Gold, usually seen as an alternative investment in times of financial and economic uncertainty, has failed to see significant safe-haven buying from either of those factors due to a stronger dollar.
“Gold remains aloof from any safe-haven buying that may be inspired by the ongoing Greek situation,” said HSBC analyst James Steel.
Safe-haven buying seems to have by-passed gold in favour of US Treasuries and other sovereign debt, he said.
The Japanese yen has also been well bid. Spot gold fell 0.2 percent to $1,153.45 an ounce by 0338 GMT, after dropping more than 1 percent in the previous session. The metal fell to $1,148.05 at one point on Tuesday, its lowest since March 18.
Silver dropped 1 percent on Wednesday after falling 4 percent overnight and was trading near its lowest since December 2014. Platinum tumbled to its lowest since early 2009, while palladium fell to mid-2013 lows.
The dollar was trading near one-month high against a basket of major currencies. A stronger greenback makes dollar-denominated metals more expensive for holders of other currencies.
The dollar has been supported by weakness in the euro as uncertainty persisted over Greece’s fate in the euro zone after it defaulted on a payment to the International Monetary Fund.
Euro zone members have given Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe’s currency bloc and into economic ruin.
Traders said the technical picture for gold also doesn’t look good. The next support for gold is at $1,144, said ScotiaMocatta analysts. And a break below $1,133 could open up a fresh wave of selling, down to the $1,000 mark, they said.
Traders will also be keeping an eye on the minutes of the Federal Reserve’s June policy meet to be released later on Wednesday for clues on when the U.S central bank would begin to increase rates.
Prospects of higher U.S. rates later this year have weighed on non-interest-paying bullion. Source: Arabian Business
PRICES AT 0338 GMT