Singapore: Gold fell to a six-week low on Friday and was headed for its biggest weekly drop since December as investors sold the precious metal to cover losses in equity markets, while a softer euro also weighed on prices.
The euro nursed heavy losses, while shares in Asia eased with investors turning cautious as weak Eurozone growth data presaged a bleak outlook ahead of a G20 meeting in this session and on Saturday in Moscow.
Gold hit a low of $1,629.89 (Dh5,986) an ounce, its weakest since early January, and stood at $1,633.61 by 0713 GMT, down 85 cents. Gold was headed for a two per cent drop this week.
“It looks bearish at this time, so we might see $1,600. [But we first] have to breach $1,625,” said Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore, adding that there was no physical buying from China which was away on a week-long Lunar New Year break.
“Hopefully, next week when China comes in, we will see more support on gold.”
Gold ended up around seven per cent in 2012 — its 12th straight year of gains in one of the longest bull runs ever for a commodity. But worries about gold appetite have emerged with data showing global demand fell last year for the first time since 2009 as jewellery buying abated in the key Indian and Chinese markets, and as US and European coin and bar investment dropped.
US gold fell $1.70 an ounce to $1,633.80.
The market is now waiting for the outcome of the G20 meeting and its impact on currency markets to give fresh trading cues to bullion, which has come under pressure after data showed the Eurozone slipped deeper into recession in late 2012 than had been expected.
German Finance Minister Wolfgang Schaeuble said on Friday exchange rates should reflect market conditions and he believed the Group of 20 would take the same position on currency exchange rates as that already expressed by the Group of Seven.
A firmer Japanese currency dragged on yen-based gold, platinum and palladium futures on the Tokyo Commodity Exchange
TOCOM palladium rallied to its highest since mid-2001 this week on hopes of rising demand from auto makers in China.
“Palladium demand is steady but we don’t see much interest in platinum. The demand for palladium comes from the industrial sector at this moment,” a physical dealer in Tokyo said.
“The discounts for gold bars have narrowed to 50 to 75 cents because TOCOM is down, so we are seeing fewer people selling their gold back to us,” said the dealer, referring to retail investors in Japan.
Gold bars were offered at discounts of 75 cents to $1 to spot London prices in Tokyo this week.
Premiums were at $1 to $1.50 in Hong Kong and $1.20 an ounce in Singapore.
Palladium and platinum have outperformed gold so far this year on an improving global economy and after mining disruptions in South Africa, as well as a drop in supply from Russia, triggered fears of a deficit in the metals used in jewellery and auto catalysts.
Holdings of the largest gold-backed exchange-traded-fund (ETF), New York’s SPDR Gold Trust, fell 0.23 per cent on Thursday from Wednesday, while those of the largest silver-backed ETF, New York’s iShares Silver Trust, rose 0.26 per cent during the same period.
