Global commodities are taking a battering this week. After oil prices fell below the critical $50 a barrel point yesterday, gold has now dipped lower than $1,200 an ounce.
The safe have asset has fallen 0.57 per cent, or $6.90, to $1,196.30 per ounce for the first time in more than a month.
Miners of the yellow metal are paying for the losses. Randgold Resources' share price lowered 2.24 per cent while Fresnillo's edged down 2.88 per cent.
Both dropped to the bottom of FTSE 100 index and are expected to remain under pressure as long as the sell-off in global bond markets lingers, said Ipek Ozkardeskaya, analyst at London Capital Group.
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The yellow metal was trading lower for its fifth straight session on improving US yields, Ozkardeskaya said. "A further decline toward the $1,180 could be considered on the back of improved US yields."
This comes after news that gold prices ended February 8.3 per cent higher for the year so far.
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David Morrison, analyst at Spread Co, said gold has taken a hammering as investors price in more monetary tightening from the US Federal Reserve.
According to the Thomson Reuters, its CRB index, which measures 19 commodities, is headed for its biggest weekly fall since November.
China's decision to cut its economic growth target for 2017 to around 6.5 percent has hurt commodities, said Vishnu Varathan, senior economist at Mizuho Bank. Varathan added:
But the underlying tone there is there should be some support on the way down because China hasn't really relinquished its desire for growth stability either. Commodities might take a step back, a bit of a breather from the rally last year, but the hopes are tilted to the upside.