GOLD dropped to a six-month low on Thursday, pressured by Middle East tensions, rising US interest rate expectations and the looming SpaceX initial public offering, said the Financial Times.
The metal fell more than 1% to touch $4,022 per ounce, its weakest level since late November and putting it on course for its worst quarterly performance in nearly a decade. It later recovered slightly to trade at $4,091, the newspaper said.
Bullion has shed more than 20% since the Middle East war began, as some central banks sold gold to defend their currencies. Turkey sold and swapped $20bn in gold for that purpose, while Russia has also offloaded reserves to support its fiscal position.
Speculative investors who drove a gold-buying frenzy late last year and early this year have largely exited the trade. “When things kicked off in Iran, people de-risked their portfolios,” said Peter Kinsella, head of investment services at UBP, adding that margin-driven selling had compounded the pressure.
A shift in US interest rate expectations has been a further drag. Surging oil prices have stoked inflation, prompting traders to abandon bets on two or three rate cuts this year and price in a quarter-point increase instead, raising the opportunity cost of holding an incomeless asset like gold, said the FT.
The SpaceX IPO on Friday is an additional headwind. “Gold is struggling at the moment, and investors are looking at the next big thing,” said Tom Price, analyst at Panmure Liberum. Jefferies analyst Mohit Kumar described the wave of upcoming mega-listings as a near-term liquidity drain weighing on both gold and crypto.
Gold ETFs recorded net outflows of 55 tons between March and May, reversing nine consecutive months of inflows, according to World Gold Council data.
