Articles
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PRECIOUS-Gold prices extend slide as haven appeal dissipates
by reuters.com
* Talk of U.S. recovery, retreat in Cyprus fears hurt gold
* Prices recover from 3-1/2 month low but pressure remains
* Silver hits 8-month low, at cheapest versus gold since August (Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, April 3 (Reuters) - Gold prices fell on Wednesday, extending the previous day’s sharp slide, as the metal’s appeal as a haven from risk was hurt by speculation the U.S. economic recovery is gaining traction and a retreat in concerns over Cyprus.
Gold slid 1.4 percent on Tuesday, its biggest one-day drop since February 20, as U.S. stocks rallied towards record highs. Firmer appetite for assets seen as higher risk, like equities, dented interest in safe-haven bullion.The metal hit its lowest since March 8 in early trade at $1,563.06, but clawed back some losses as European stocks fell.
Spot gold was down 0.4 percent at $1,568.65 an ounce at 0930 GMT, while U.S. gold futures for April delivery were down 0.5 percent at $1,568.50 an ounce.
“Ascribing gold weakness to equity strength is shorthand for talking about risk appetite, and there’s no doubt that the ostensible solution to what’s been happening in Cyprus took away some of the short-term reason to hold gold,” Mitsui Precious Metals analyst David Jollie said.
“There is certainly a degree of optimism about the U.S. economy, and that should lead to some reductions in gold long positions,” he added. “There is scope for gold to strengthen if economic data isn’t as strong as people are hoping, but at the moment, there’s a lack of justification to buy in the short term.”
European shares fell on Tuesday as speculation of takeover activity among telecom stocks dissipated, while safe-haven German Bund futures steadied after the previous session’s drop. The dollar edged up a touch versus the euro.
Financial market participants largely stuck to the sidelines ahead of policy announcements from the Bank of Japan and the European Central bank on Thursday, and Friday’s key U.S. non-farm payrolls data.
“With NFP figures due out on Friday, the (gold) market may not get itself too short in case of a bad figure,” Marex Spectron said in a note. “But overall, the trend is lower and the sentiment is negative.”
INDICATORS POINT LOWER
From a technical perspective, Tuesday’s sell-off has left gold trading just above support at $1,561.55 and $1,555.55, the March and February lows, UBS said in a note.
“With the trending and momentum indicators pointing lower, a break below these would extend weakness to test strong support at 1526.97, the May 2012 low,” the Swiss bank said.
“Silver… is currently testing critical support at 27.01, the August 2012 low,” it added. “With the moving average convergence divergence (MACD) below its zero line, reflecting bearish trend, a break below this would trigger deeper sell-off to test next significant support at 26.50 and 26.16.”
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