Gold slides from high of 14 weeks as stocks climb

Gold prices slid more than one per cent on Monday as a rebound in stock markets prompted investors to cash in gains after last week’s rise to 3-1/2 month highs, after concerns over the eurozone periphery faded.

Spot gold was down 1.6 per cent at $1,317.10 an ounce at 1142 GMT, on track for its biggest one-day loss in nearly seven weeks. US gold futures for August delivery were down $19.10 an ounce at $1,318.30.

The metal rallied to its highest since mid-March at $1,345 an ounce last week after minutes of the US Federal Reserve’s last meeting showed a dovish tone and as concerns about Portugal’s largest listed bank sparked heavy selling of equities.

“There has been some profit-taking this morning,” Andrey Kryuchenkov, an analyst at VTB Capital, said. “The market overshot to the upside after the Fed minutes last week, the dollar generally held well and we are still not seeing substantial physical flows.”

He added, “Peripheral yields have stabilised (and the concern over Portugal) is likely to be a one off event. I don’t think there will be enough risk aversion to stimulate more gold buying here.”

Investors were also eyeing physical buying in Asia, which has been subdued due to the recent price gains.

“There isn’t much demand from India, China or anywhere in Southeast Asia for the last few weeks,” a dealer in Singapore said. “Unless prices drop sharply in a short period of time, I don’t think we can expect any price support from the physical markets.”

India surprised bullion markets last week by keeping its import duty on gold and silver unchanged at 10 per cent in its budget, a move likely to limit overseas purchases by the second-biggest bullion consumer and further encourage smuggling.