Gold drops to fresh five-year lows near $ 1087

Gold drops to fresh five-year lows near $ 1087
FXStreet (Mumbai) – Gold prices on Comex extends its downward spiral and drops to fresh five-year lows of $ 1186.10 ahead of US open, keeping in sync with sell-off witnessed across the commodities space.

Gold accelerates losses

Currently, gold trades -1.40% lower at 1088, swiftly recovering from a new multi-year low reached at 1086.10. Gold continued to face headwinds, tumbling further after its sharpest drop in almost two years, while markets saw more losses ahead as the physical demand outlook from Asia weakens.

Physical demand, including China and India, has remained weak despite the recent steep drop in price. China’s gold reserves rose to 1,658 tonnes as of the end of June, from 1,054 tonnes in April 2009, according to the People’s Bank of China (PBoC).

In another evidence of waning investors’ confidence in the yellow metal, holdings in SPDR Gold Trust, the largest gold fund in the world, have marked their lowest point since 2008 on Tuesday at 22.17 million ounces, according to Bloomberg.

Looking ahead, existing home sales are due on Wednesday, and are expected to remain around 5.4 million, although the impact on US dollar should be only mild.

Gold Technical Levels

The metal has an immediate resistance at 1108 and 1112 levels. Meanwhile, support stands at 1087 below which doors could open for 1080 levels.
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Gold drops to fresh five-year lows near $ 1087
Source: FXStreet