Metadesc: Gold prices reduced by 4% to touch the 5-year low level on Monday after sellers in China sold off it within moments amidst of increasing expectations from US rate hike.
Gold prices reduced by 4% to touch the 5-year low level on Monday after sellers in China sold off it within moments amidst of increasing expectations from US rate hike.
The bullion went down to a level of $1,088.05 an ounce — the lowest level in the last five years. The prices plunged right after the SGE (Shanghai Gold Exchange) initiated trading.
Gold has managed to reach past $ 1,100 support level after the unexpected plunge. China’s response to reducing prices is not good.
The gold prices have been going down continuously for some time now. Traditionally, it seems a good time to buy the metal at lower prices; however, China is going the other way round.
According to Victor Thianpiriya, Analyst, ANZ Bank Singapore, China’s response to market shows that the situation is going from bad to worse.
Reuters’ data shows that total traded lots on Friday at Shanghai Gold Exchange were nearly 27,000 compared to over 1 million on Monday.
If Monday’s data is left aside, the average lot size for the entire July month was below 30,000 level. As a result of this excessive trading, spot gold plunged 2.3% to $1,107.20 an ounce latest by 0423 GMT.
In an official statement on Friday, China stated that its gold reserve had increased 57% at June end from the previous adjustment that it made over 6 years ago.
Even after this increment, gold is now 1.65% of country’s foreign reserve compared to 1.8% in June 2009.
Janet Yellen, Chair, Federal Reserve, addressed Congress saying that Fed would look forward to increasing interest rates, provided US economy meet growth expectations. Right after his statement, the Gold has been breaching its key support levels.
Due to this extensive reduction in Gold prices, platinum has also plunged 5% to $942.49 an ounce, the lowest level in last six years.
