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Gold drops in longest losing streak in nearly 7mths
June 2, 2014, 9:25 am

Gold slid for a fifth straight session on Monday in its longest losing streak since November, hurt by stronger global equities and weak physical demand in Asia.

Spot gold had eased 0.2 percent to $1,247.89 an ounce by 0235 GMT, not too far from a 4-month low of $1,241.99 hit on Friday. The five-day fall is the metal's longest losing run since October-November when it dropped for seven straight days.

Gold is often seen as an investment-hedge for riskier assets such as equities. Tokyo shares led Asia higher early on Monday, lifted by another closing record on Wall Street and upbeat China data.

"The technical outlook for gold is not looking very good. There is a good chance it will fall to $1,230 and then all the way $1,200," said one trader in Tokyo.

"Physical markets haven't reacted very much to last week's drop but if prices fall to $1,200, then we could see some action."

Reuters technicals analyst Wang Tao said gold is expected to fall to support at $1,229 per ounce, a break below which would lead to a further loss to $1,214.

Physical buying failed to pick up as consumers expect gold prices to fall even further. In top buyer China, banks are also adequately stocked from last year's record imports, leaving them to focus on selling existing stocks first.

In No.2 consumer India, premiums almost halved last week on hopes the new government would ease restrictions on imports of the precious metal.

US gold coin sales in May fell slightly from a month earlier amid lacklustre retail buying interest, US Mint data showed.

Other data also showed that hedge funds and money managers cut their bullish bets in gold futures and options in the latest week to their lowest level in nearly four months, another sign of waning investor interest in the metal amid higher equities.

"With western investors largely absent and the physical market quiet, it is hard to see what is likely to propel gold higher, at least near term," HSBC analysts wrote in a note.

"We do not expect an early or quick gold turnaround, as the market may not have bottomed yet."

Key physical markets in Hong Kong and China were shut on Monday for a public holiday.

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