Gold hits 3-1/2 month low as dollar rises
LONDON Gold prices hit 3-1/2-month lows on Wednesday as the dollar climbed to its highest since February against the euro and stock markets held near recent peaks, after a technical breakout the previous day saw the metal slide more than 2 percent.
Gold posted its biggest daily fall since mid-December on Tuesday after strong US data helped send US and German stocks to record highs, with losses accelerating as prices broke out of the narrow range they had held in for more than a month.
Spot gold initially took some support from a softer tone to European stocks on Wednesday, but later fell to its weakest since early February at $1,260.44.
At 1411 GMT it was at $1,262.51 an ounce, down 0.1 percent, while US gold futures GCv1 for June delivery were down $2.60 an ounce at $1,266.50 an ounce.
Strong economic data in the United States shored up world stocks on Wednesday, as record highs for US and German markets whetted appetites for risk.
US stocks were little changed on Wednesday following yet another record close on the benchmark S&P 500 index.
“It looks as though the bears are in the driving seat,” Commerzbank analyst Daniel Briesemann said. “Equity markets are soaring again, so market players may think they can earn more money with stocks than gold.”
The euro fell to a three-month low as expectations solidified for a multi-pronged attack on monetary policy by the European Central Bank next week. Comments this week by ECB President Mario Draghi were read as confirming the bank is on course to ease policy significantly.
Gold buying in the price-sensitive Asian markets remained softy, traders said, with Chinese demand failing to pick up.