Gold slips more than 1% as investors sell bullion to raise cash
Gold slipped more than 1 per cent on Thursday as losses in other markets forced investors to sell bullion to raise cash, undermining its usual status as a so-called safe-haven asset.
Holdings of the world's largest exchange-traded fund dropped to their lowest level in three years, as festering worries over global growth continued to sap broad investor confidence.
Gold, which has plunged more than 19 per cent this year, marked a session low of $1,339.86 an ounce and stood at $1,350.61 by 0200 GMT (7:30 a.m. IST), down $25.89.
It hit around $1,394 on Wednesday after this week's price drop to a 2-year low ignited a spate of buying in gold bars, coins and nuggets in Asia.
On Monday, spot gold recorded its biggest ever daily fall in dollar terms - catching gold bulls, speculators and veteran investors by surprise.
"You can see that sentiment is very fragile, very weak. The downtrend may not be over and U.S. investors have kept selling over the last two days," said Joyce Liu, an investment analyst at Phillip Futures in Singapore.
"If we continue to see this kind of drop, then maybe the physical buying won't be sustained because people will think the price is going to go drop further. We may actually see a decrease in physical demand."
U.S. gold futures for June delivery fell more 2 per cent to a session low of $1,335.60 an ounce, dragging down cash gold, silver and platinum group metals.
Gold has failed to capitalise on tensions in the Korean peninsula and has been hit by uncertainty over the U.S. Federal Reserve's stimulus programme, prompting investors to dump their holdings.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.97 per cent to 1134.79 tonnes on Wednesday, the lowest since April 2010.
In other markets, Asian shares inched lower on Thursday, taking their cues from an overnight drop in U.S. and European equities on renewed concerns about global growth.
Copyright @ Thomson Reuters 2013