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Gold continues to struggle after worst month in 2 years

(Global Times)    07:39, August 04, 2015

Gold steadied not far above a 5.5-year low on Monday, struggling to scale higher at the start of the month after its deepest loss in two years in July, as expectations for a near-term US interest rate hike kept sellers nearby.

Gold's rout deepened last month as the dollar strengthened after upbeat US economic data and comments by the Federal Reserve signaled it was on course to raise interest rates for the first time in nine years.

That rate hike could come as early as September, presenting more downside risk for non-interest yielding gold.

"The story's simple yet powerful enough to inject a bearish trend for gold," said Barnabas Gan, an analyst at OCBC Bank.

Spot gold was down 0.3 percent at $1,093 an ounce by 0928 GMT. The metal hit a low of $1,077 on July 24, its weakest in 5.5 years. Bullion lost almost 7 percent in July, its steepest monthly drop since June 2013.

It fell for a sixth straight week last week, its longest retreat since 1999.

Investors are eyeing the monthly US nonfarm payrolls report on Friday, and a strong print could mean further weakness for gold, Gan said.

"If indicators show the US economy is improving very strongly, it does give a cue that gold may breach the $1,000 support," he said.

US gold for December delivery was unchanged at $1,095.10 an ounce.

Money managers kept their first bearish stance in COMEX gold in at least a decade in the week ended July 28, suggesting the recent mass exodus from bullion was more than a knee-jerk reaction.

There is unlikely to be strong technical support for gold until it hits the February 2010 low of around $1,044, said INTL FCStone analyst Edward Meir, who expects the metal to trade between $1,050 and $1,131 through this month.

Amid waning interest in bullion, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped again, to 21.63 million ounces on Friday, the lowest since September 2008.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Editor:Liang Jun,Bianji)

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