[miningmx.com] — GOLD fell to its lowest in ten weeks on Tuesday, putting the price on course for its worst monthly performance in 13 months as safe-haven demand evaporated and investors booked further profits on the 2010 rally.
Strong consumer demand, particularly in Asia, continues to provide a floor for the price and a significant decline in speculative holdings of gold futures has taken some of the pressure off.
But investor sentiment towards gold has soured in the last few sessions, as evidenced by the largest one-day outflow in three months from the world’s biggest exchange-traded gold fund.
“Risk aversion is definitely much lower at the moment than it was a few weeks ago,” said Commerzbank analyst Daniel Briesemann.
“It is becoming increasingly clear that especially as the debt crisis in the euro zone periphery calms, investors feel less of a need for safety,” he said, adding: “That’s a major reason for letting gold fall as much as it has over the last couple of days.”
Spot gold was trading at $1,327.38 an ounce around noon on Tuesday, down 0.5% on the day and set for a 6.5% decline in January, the biggest monthly fall since a 7% drop in December 2009.
US gold futures for February delivery GCG1 were down 1.3% at $1,326.80 an ounce.
Adding to the case against gold for now was strong demand at the euro zone rescue fund’s first debt offer, which pushed the euro to two-month highs.
“The gold market is a bit negative for the time being,” said Ronald Leung, a physical trader at Lee Cheong Gold Dealers, adding that talk of further tightening from China before the Lunar New Year holiday also adds to the bearish sentiment.
“But on the physical side, people are still buying. There doesn’t seem to enough supply in the physical market.”
Even with price pressures building up in the emerging world, investors are shifting out of gold right now.
Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 10.926 tonnes, its biggest one-day decline since early October, to 1,260.843 tonnes by Jan 24.
