Safe-haven appeal of gold forgotten
Gold prices regained some strength on Thursday after a drop in the previous session attracted bargain hunters. However, a strong dollar and fading expectations of more monetary easing in the United States made the yellow metal vulnerable to more selling.
The physical gold market lacked activity as jewelers looked for a bargain, while bullion holders shifted their money into equities after strong U.S. economic data. Accommodative monetary policies by global central banks sent investors back into risk assets.
Gold extended losses and fell more than 3 percent on Wednesday, because the Federal Reserve in the U.S. offered no clues on further easing.
Sentiment towards the yellow metal is turning negative. After slipping below $1,650, the gold price may go down further to $1,600, while possible rebound will be capped at around $1,670.
From a positive perspective, analysts expect that gold may become range-bound between $1,600 and $1,800 for a while.
Nevertheless, the safe-haven appeal of the yellow metal is forgotten for the time being. The demand is sluggish, because the U.S. dollar is regaining strength. Speculators dumped their gold on a profit making sprees.
Gold has fallen around 8 percent since late February as investment funds appeared to have closed out of their bullish gold bets on worries the Fed has no intention to embark on another round of major asset purchases to keep interest rates and borrowing costs low.
Gold bullion rose to a record of around $1,920 last September on fears the euro debt crisis could stall global growth.
