Prices of gold in the world market took a dive Monday as a result of a more robust US greenback and a rebound in bonds and equities, as central banks hinted at more stimulus, allaying worries of a looming economic turmoil.
Latest charts show that spot gold could not sustain its recent gains and fell 0.4 percent at $1,509.12 an ounce, while US gold futures likewise declined 0.4 percent to $1,518.71 per ounce. The US currency is moving up, and considering that the yellow metal performed steadily in the past weeks, traders expect to see some profit-taking to flow, OANDA analyst Jeffrey Halley said.
Relatively, retail sales also proved to be a major factor in gold's price swings of late. For instance, in the May-July period, consumer spending was up 1.9 percent when compared to the recent quarter. Robust sales in the retail sector also dragged gold prices down around $5 before recouping most of its losses in the following sessions.
The US greenback index, against a host of 6 key currencies, floated around a 2-week peak reached on Friday, making the US dollar-denominated precious metal more expensive for traders acquiring other currencies. The ten-year treasury output of the US broke from a 3-year trough it reached over the weekend.
In Asia, share markets were mostly upbeat, as optimism of further support from major banks, in addition to beefed-up measures initiated by countries like China and Germany eased investors' worries of a global economic plunge.
On Saturday, the Chinese central bank rolled out an important interest rate package to help move borrowing costs lower for businesses and perhaps lift a sagging economy which has been dented by the trade discord with the United States.
So far, spot gold has rallied nearly 20 percent since it retreated to a low of $1,264.84 back in May, bolstered by growing risk pessimism from the negativity fanned by Washinton's trade friction with Beijing and financial loosening by federal banks.
In contrast, financial managers slashed their bullish outlook in the COMEX gold and decreased net long-term bets in silver contracts in the days leading to August 12, the US Commodity Futures Trading Commission (CFTC) disclosed over the weekend.
Meanwhile, Wall Street market observers are bracing for the US Federal Reserve's Jackson Hole Symposium set this week to have a more detailed perspective on the future trajectory of key interest rates. Traders expect around 75 percent chance that a 25-basis point decrease will be implemented next month.
