Gold was close to a one-week low on Thursday after better-than-forecast U.S. jobless claims, while European Commission documents showing Cyprus must sell 400 million euros’ worth of gold reserves under its bailout weighed on sentiment.
Reuters report yesterday showed that gold fell to its lowest since April 5 at $1,553.10 an ounce and stood at $1,557.51 by 1244 GMT, broadly unchanged on the day. On Wednesday gold had posted its biggest one-day fall since February 20, accelerating losses after news of the Cyprus gold sale plan.
Heavy outflows from exchange-traded funds, a second cut in six weeks in Goldman Sachs’ 2013 gold price forecast, and uncertainty over the U.S. Federal Reserve’s stimulus programme also dragged on prices.
“The Cyprus news has damaged gold in the last 24 hours in conjunction with the Goldman gold downgrade and the 17-tonne outflows from the metal’s exchange-traded funds,” Societe Generale analyst Robin Bhar said.
Gold was little affected by tensions on the Korean peninsula with limited bargain huntering and jeweller buying in Asia resurfacing as South Korea and the United States remained on high alert for any North Korean missile launch.
“Rallies are there to be sold at the moment, and that is shown by the price action, as there was no reaction to the Korea tensions or to the Cyprus bailout itself,” Bhar added.
Cyprus’ sale plan, set out in a draft assessment of Cypriot financing needs prepared by the European Commission, would be the first major gold disposal by a euro area central bank since France sold 17.4 tonnes of gold in the first half of 2009.
At current prices, 400 million euros’ worth of gold amounts to 10.36 tonnes of metal. Cyprus’ total bullion reserves stood at 13.9 tonnes at end-February, according to data from the World Gold Council.
Holdings of the largest gold-backed exchange-traded-fund (ETF), New York’s SPDR Gold Trust GLD, fell 1.4 percent to 38.051 million ounces on Wednesday.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
