Gold Struggles to Recover from 5 and half Year Low, but More Weakness Seen

Gold Struggles to Recover from 5 and half Year Low, but More Weakness Seen

  • Gold fell from 5th straight week, longest run since 2012.

Gold fell for a third session on Monday, trading not far above its lowest level since early 2010, with expectations of further losses in the metal as the Federal Reserve moves closer to raising interest rates.

The Fed will hold a policy meeting this week at which policymakers are likely to provide more signals pointing to a rate hike later in the year as the U.S. economy strengthens. 

Gold hovered just above its lowest level since 2010 on Monday, struggling to move higher as the market supposes the U. S.  Federal Reserve is moving closer to increasing rates.

Spot gold was down 0.3% at $ 1,095.50 an ounce by 0035 GMT, after falling for a 5th straight week.

Bullion lost more than 3% last week following a rout, accompanied by big volumes in New York and Shanghai that began on Monday and pulled the price to as low as $1,077 on Friday, its cheapest since Feb, 2010.

U.S. gold for August delivery gained 0.9% to $1,095.10 an ounce.

Gold is expected to struggle for the rest of this year after sliding to 5 year lows on expectations of higher U.S. interest rates, before snapping three years of losses in 2016, a Reuter’s poll showed.

As gold prices slumped, holdings of the world’s biggest gold-backed exchange-traded fund, the SPDRT Gold Trust, fell for a seventh day on Friday to 21.87 million ounces, the lowest since September 2008.

U.S. speculators turned bearish on Comex gold for the first time in at least a decade in the week ended July 21 as a selloff in Shanghai and New York triggered the biggest rout in years, U.S. government data showed on Friday.     

Germany cut its gold holdings by 2.395 tons last month, data from the International Monetary Fund showed, while both Russia and Kazakhstan continued to add to their reserves.