Gold tumbles B500 to B18,150

Local gold prices tumbled 500 baht at 5.22pm on Friday, taking cue from world markets where precious metals took a beating from a strong dollar and slumping oil prices.

The Gold Traders Association changed its prices eight times during the day, representing a decline of 500 baht per baht weight in total.

It announced the buying price at 18,050 baht and the selling price at 18,150 baht per baht-weight for gold bars Friday evening.

The buying price for gold ornaments was 17,782.68 while their selling price was 18,550 baht per baht-weight.

In world markets, gold and silver slumped to the lowest level since 2010 on Friday as the dollar strengthened after the Bank of Japan unexpectedly boosted unprecedented stimulus and the Federal Reserve ended asset purchases, Bloomberg reported from Singapore.

Bullion for immediate delivery lost as much as 2.6% to $1,167.49 an ounce, the lowest since July 2010, and traded at $1,177.26 at 4.13pm in Singapore, Bloomberg generic pricing shows. Silver slid as much as 3% to $16.0009 an ounce, the lowest since February 2010.

They fell as the dollar rose to the highest in more than six years against the yen.

The Fed is weighing the timing of interest-rate increases as other central banks add to stimulus to boost their economies.

The Bank of Japan said it’s targeting an 80-trillion-yen ($726-billion) expansion in the monetary base, up from 60 to 70 trillion yen before.

Gold yesterday erased the year’s advance after US gross domestic product beat estimates and China probed a surge in precious-metals exports.

“People are generally looking at the direction of the dollar, which moved higher against the yen after the BoJ announcement, although the news itself is neutral for gold,” said Wallace Ng, a Shanghai-based trader at Gemsha Metals Co. “A higher dollar depresses prices and sentiment in the gold market was already weak because of the Fed.”

Bullion is heading for a decline of 4.4% this week, the most since September 2013. The metal is also set for the first consecutive monthly loss in 2014. Holdings in the SPDR Gold Trust shrank for a third day to 741.2 tonnes yesterday, the least since Oct 2008.

Double-whammy

Gold rose 70% from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent. Prices slumped 28% last year, the most in three decades, on expectation that the central bank will scale back its bond-buying programme that was put in place to fuel growth while failing to stoke inflation.

The US central bank, which has held its key rate at zero to 0.25% since 2008, this week cited an improving job market in deciding to end bond buying, while maintaining a commitment to keep rates low for a considerable time. It also said inflation is running below its 2% target.

“Precious metals cratered, hit by a double-whammy of the rather hawkish Fed policy statement, coupled with a stronger-than-expected US GDP report,” Edward Meir, an analyst at INTL FCStone Inc, wrote in a note. “Gold is again confronting the spectre of a stronger dollar, rising equity prices and tame inflation, a trifecta that does not bode well for price prospects going into 2015.”

Futures for December delivery fell as much as 2.7% to $1,166.20 an ounce on the Comex in New York, the lowest level since July 2010, before trading at $1,175.80.

$1,000 gold

The collapse of oil prices into a bear market amid rising global supplies has also cut inflation concerns. The chances of bullion dropping to $1,000 are increasing as cheaper energy “means lower inflation and adds to the bearish gold story,” said Michael Haigh, head of commodities research at Societe Generale SA, who correctly forecast the metal’s 2013 rout.

The bank isn’t alone in predicting more losses for gold, which is Morgan Stanley’s least preferred metal. Jeffrey Currie, Goldman Sachs Group Inc’s head of commodities research who also correctly forecast 2013’s slump, said last month that the worst isn’t over yet for gold. He expects prices to drop to $1,050 by the end of year.

Concern that demand may falter in the world’s largest users also hurt prices. China sent investigators to probe a seven-fold surge in September’s precious-metals exports. In India, the biggest consumer after China, imports are set to drop in October after a more than four-fold jump last month.

Gold of 99.99% purity on the Shanghai Gold Exchange, the benchmark, sank as much as 3.1% to 230.05 yuan per gramme ($1,172.35 an ounce), the lowest level this year. Volumes tumbled to a one-month low today.

Silver for immediate delivery slid 2.4% to $16.1078 an ounce, set for a fourth monthly decline that’s the worst run since June 2013. An ounce of gold bought as much as 73.3154 ounces of silver today, the most since April 2009.