Gold tumbles again, could see worst week in 30 years
Gold recovered from a three-year trough today as lower prices attracted Chinese buyers and as Asian stocks fell, but the metal was still headed for its worst week in nearly two years after the Federal Reserve said it would curb stimulus.business Updated: Jun 21, 2013 10:23 IST
Gold recovered from a three-year trough on Friday as lower prices attracted Chinese buyers and as Asian stocks fell, but the metal was still headed for its worst week in nearly two years after the Federal Reserve said it would curb stimulus.
Gold for immediate delivery fell over 5 percent on Thursday, along with other commodities and global stock markets, a day after Fed Chairman Ben Bernanke said the U.S. economy was strong enough for the bank to wind down its bond-buying programme.
While stock markets extended losses on Friday to new nine-month lows, gold edged higher as China, the No. 2 gold consumer after India, snapped up bullion at lower prices, traders said.
But sentiment remains weak, with analysts expecting a correction in the wake of slowing U.S. stimulus, which has supported gold prices since 2008.
"What the market is undergoing now is a state of normalization, going back to pre-stimulus times," said Joyce Liu, investment analyst at Phillip Futures in Singapore.
"Since the first stimulus programme, markets have jumped despite fundamentals not justifying such a spike."
Until recently, gold - seen as a hedge against inflation - had gained as the global economy took a hit and central banks acted to boost their economies. Gold touched an all-time high of $1,920.30 in 2011.
It has fallen 23 percent this year and over 7 percent this week on fears over the withdrawal of stimulus.
Spot gold was up 0.9 percent at $1,288.95 an ounce by 0347 GMT on Friday. The metal earlier fell to $1,268.89 - its lowest since September 2010 and a level which would have marked the worst weekly decline in 30 years if it had ended the day there.
Comex gold futures rose 0.2 percent after declining over 1 percent to their lowest in three years.
Buyers in India and China helped cap gold's losses in April when gold fell its most in 30 years over two days. The sharp decline after 12 years of gains released pent up demand in Asia, sending kilo bar premiums to all-time highs. <GOL/AS>
Demand in India has slowed in recent weeks due to government curbs on imports.
UBS lowered its 2013 gold price outlook by 10 percent to $1,440 an ounce, and its 2014 forecast to $1,325 an ounce from $1,625.
Gold is on weak technical ground and will fall below $1,200 an ounce before finding support, technical analysts said.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.4 percent to 995.35 tonnes on Thursday - the