IMPROVING economic data out of the world’s largest economy is taking the bottom out of the gold market, analysts said over the weekend.
After closing at $1,772.25 on the last trading day of August, the price of gold fell 2.9 per cent during October, 0.3 per cent during November, 2.3 per cent during December, 0.7 per cent in January, and 5.1 per cent in February to rest at $1,576.18 at close on 1 March.
Such a string of five successive monthly declines has not been seen since 1997, said Saxo Bank’s Oli Hansen. “The combination of a rising dollar and strong US economic data has been something that gold has not been able to respond to so far,” Hansen said.
But Hansen predicted that the so-called sequester of spending cuts, combined with tax hikes and rising fuel prices could hit the US’s recovery and give some support to the yellow metal’s ailing price.
Eurozone issues, especially the hung parliament delivered by the Italian election, could also shock the system and support gold through renewed flight to safety, he predicted. Meanwhile, figures out yesterday revealed that Australian gold production increased at the end of 2012, but output was down versus the previous year. Australian production was 256 tonnes last year, industry consultants Surbiton Associates said, down four per cent on 2011. Australia is usually ranked as the world’s second producer, ahead of the US, but behind China.