Gold slides to 2-1/2 week low on upbeat economic data

LONDON: Gold extended losses to a 2-1/2-week low, as data showing economic growth on both sides of the Atlantic dented the metal’s appeal as a safe haven and triggered technical selling.
The figures showed US trade deficit narrowed to a 3-1/2-year low in June, while British businesses boomed and activity at euro zone companies expanded in July for the first time in 18 months.
Spot gold fell as much as 1.9 percent to its lowest since July 18 at $1,279.24 an ounce earlier. It was down 1.7 percent at $1,280.36 by 1402 GMT.
US gold futures for December fell $22.10 to $1,280.30 an ounce.
The falls were exacerbated by technical selling as automatic sale orders were placed by traders below the $1,300 an ounce mark to limit losses, traders said.
“The break below $1,300 triggered some stop levels and left room for more technical selling,” Commerzbank analyst Daniel Briesemann said.
“At the moment, the momentum is probably skewed to the downside and I wouldn’t be surprised to see gold fall a little bit further, maybe $10 or $20 lower, in the short term.”
The dollar fell 0.2 percent, while European shares nudged higher after data showed a faster-than-expected recovery in the UK and German economies.
Benchmark US Treasury yields rose to 2.66 percent, below July’s two-year peak of 2.755 percent but still higher than at the start of the year.
The returns from US bonds are closely watched by the gold market, given that the metal pays no interest, and as these are viewed as a key indicator of what the US Federal Reserve action will be in September, analysts said.
Gold has lost around 25 percent of its value this year on fears the Fed will curb its monetary stimulus on signs of economic recovery.
The US central bank’s tapering would support a higher interest rate environment that diminishes gold’s attractiveness.
Gold importers in top bullion consumer India remained on the sidelines for a third straight week due to policy uncertainty on shipments, and premiums eased.
Gold prices on the Shanghai Gold Exchange fell 1.4 percent on Tuesday on lower demand, dealers said.
Premiums to London spot prices in Hong Kong — a major supplier to China — have fallen to around $3-$4 an ounce from $5 two weeks ago.
As a gauge of investor sentiment, holdings in SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, fell 0.2 percent to 917.14 tons on Monday.
Gold outflows from exchange-traded products (ETPs) reached $2.6 billion in July, bringing total redemptions for the year at $30.9 billion, according to the latest data from money manager BlackRock.
Silver dropped 1 percent to $19.50 an ounce.
Platinum fell 1.8 percent to $1,421.25 an ounce and palladium lost 1.1 percent to $722.97 an ounce.