Gold sell-off sees prices hit fresh 8-month low

Thursday, September 11, 2014

Spot gold prices traded towards their lowest levels since January, giving up further ground to a stronger dollar. The yellow metal traded towards $1,235/oz today, after closing below tentative levels around $1,250/oz yesterday bringing total losses throughout September to 4.15% so far. The dollar index held above 84.20 towards the European close as the currency looks to have taken a brief pause above 84.00, after an impulsive rally at the start of the month that propelled the greenback almost 2% higher against major peers. Investors have sold off gold holdings in recent sessions with today seeing a 1% decline in the spot price ahead of ECB president Mario Draghi’s speech at a financial forum later on this evening in Milan. The anticipation of any information that could elude to ECB policy going forward, as well as speculation that the US Fed would soon begin tightening monetary policy could see further selling pressure during the Asian session overnight.

Global markets experienced further nervous selling today as a number of prominent banking groups warned that a Yes vote would prompt them to relocate their headquarters south of the border. Benchmark stock indices across Europe traded in negative territory throughout most of the day, extending the declines seen earlier on in the week after yesterday’s brief respite saw markets rally towards the close. Investors displayed further risk aversion today following the announcement by RBS, stating that “it would be necessary to re-domicile the bank’s holding company and its primary rated operating entity (The Royal Bank of Scotland plc) to England.” The comments from RBS, which followed Lloyds comments yesterday, were followed by similar announcements from Clydesdale Bank, TSB Bank and Tesco Bank which each confirmed they would set up London-based holding companies if Scotland voted to leave the UK.

Spot gold prices trade towards $1,235/oz...

XAU Curncy Gold Spot Oz 2014 09 11 16 17 47

...as dollar strength limits upside 

DXY Curncy DOLLAR INDEX SPOT 2014 09 11 16 34 48

Topics: US Fed, Gold, DXY
More from: Kash Kamal