Gold set for worst quarter on record


Gold surged around 1 percent in very choppy trade yesterday as heavy short-covering and book-squaring activities on the last trading day of a dismal second quarter lifted the metal after the previous session’s drop.
Silver, which tends to be more volatile than gold, jumped over 4 percent. Bullion sharply reversed early losses in New York morning trade despite a lack of macroeconomic news and little dramatic movements in other financial markets.
After yesterday’s rally, gold is still headed for a 24 percent loss for the second quarter, its biggest quarterly decline since at least 1968.
“There are some people covering shorts and some people taking losses as part of quarterly book-squaring to position for the next quarter,” said Bill O’Neill, partner of commodities
investment firm LOGIC Advisors. Spot gold was up 0.9 percent at $ 1,210.30 an ounce by
10:59 a.m. EDT (1459 GMT), having earlier traded as low as $ 1,180.71 an ounce, which marked the cheapest price since August 2010.
On Thursday, gold lost 2 percent and broke below $ 1,200 an ounce for the first time in nearly three years. US Comex gold futures for August were down $ 1.70 to $ 1,209.90 an ounce, with trading volume already surpassing its 30-day average, preliminary Reuters data showed.
Among other precious metals, silver rose 4.2 percent to $ 19.23, rebounding sharply from a near three-year low at $ 18.19 an ounce.
“Investors are dumping gold because prospects for the metal are tarnished by a stronger US economy, which bumps up the US dollar,” said Ishaq Siddiqi, an analyst at traders ETX Capital.
“The dollar has suffered a prolonged period of weakness due to the Fed’s ultraloose money programme, quantitative easing,” he told AFP yesterday. “With now that coming to an inevitable end, investors are pulling their cash out of gold and parking it into more growth-focused assets which are geared to a US recovery; so US dollar, domestic US equities or European equities exposed to the US recovery.”
Upbeat US economic data published Thursday fanned expectations of an end to the Fed’s stimulus, despite assurances that the US central bank would not wind up its QE policy too soon.
Gold had rocketed in September 2011 to a record peak of $ 1,921.15 an ounce, as the metal soared on the back of its safe-haven status amid fears of a new world recession following the 2008 global financial crisis.
“The exorbitant rise in gold seems to have well and truly hit the buffers after losing over 50 percent of all the gains seen off the back of the 2008 crisis,” said analyst Joshua Mahony at traders Alpari.
Commodity makets have been spooked ever since Fed Chairman Ben Bernanke last week suggested that the US central bank could begin reducing its stimulus programme later this year and wind it up completely by mid-2014.
The Fed is currently pumping out $ 85 billion a month into the US economy via bond purchases.


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