Gold prices down Bt650
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Local gold prices today suffered from a net fall by Bt650 per baht weight, as Asian gold prices fell to the lowest level since September 2010.
Gold is down as US economic data beat estimates, backing the case for reduced stimulus from the Federal Reserve as the dollar strengthened. US durable goods orders rose more than forecast in May, while consumer confidence for June exceeded projections.
Local gold prices were adjusted 10 times today, starting with the Bt350 cut in the morning.
Gold bar is now sold at Bt18,150 per baht weight while ornament at Bt18,650.
HSBC Securities (USA) cut the 2013, 2014, and 2015 gold price forecasts in April following financial and bullion market turmoil. The average annual gold price for 2013 is revised down from $1,542 an ounce to $1,396.
Its analyst James Steel said that after an initially encouraging upwards price performance in the aftermath of the April sell-off, which lasted until early May, the bullion rally lost momentum and gold and silver prices resumed their slide, with losses accelerating notably in the aftermath of the June 18-19 FOMC meeting.
HSBC further cut the forecast due to five factors. First, the discussion by the Fed of a tapering, or reduction, of its quantitative easing (QE) asset purchases was more aggressive than we initially envisaged, and has resulted in higher US Treasury yields, which are traditionally negative for gold. Second, turmoil in emerging markets and the prospects of lower growth in China have weighed on bullion.
"Our economists cut 2013 China GDP forecast from 8.2 to 7.4 per cent and 2014 GDP forecast from 8.4 to 7.4 per cent China," he said.
Third, a slowdown in China’s GDP growth may reduce consumer appetite for physical gold in that country.Fourth, HSBC’s bullish USD view implies more gold weakness ahead. Fifth is lackluster demand.
"Although we expect a positive physical demand response to eventually cushion gold’sdrop, we do not believe it will be of the scale or magnitude of the reaction in April. Price-sensitive buyers may wait for a well-defined bottom before entering the market. Increased import duties and the Indian government’s efforts to reduce gold imports are curbing that nations’ demand for bullion and crimp jewelry demand. One support for gold was increased central bank buying, as reserve mangers sought to diversify their foreign exchange reserves. These reserves are now either falling or not growing as quickly due to declines in current account balances in many EM nations as a consequence of the slowdown."
