Gold stuck near 5-1/2-year low as Fed hike looms

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Gold languished near its weakest level since early 2010 on Tuesday, with no meaningful recovery seen as expectations for a U.S. interest rate increase grow. The Federal Reserve begins a two-day meeting later in the day where policymakers are likely to signal further that a rate hike later in the year is certain as the U.S. economy strengthens.

FUNDAMENTALS

* Spot gold was flat at $1,093.45 an ounce by 0051 GMT. Bullion fell to as low as $1,077 on Friday, its cheapest since February 2010, stretching its losing run to a fifth straight week.

* U.S. gold for August delivery slipped 0.3 percent to $1,093 an ounce.

* Amid weaker gold prices, holdings of the world’s biggest gold-backed exchange-traded fund, the SPDR Gold Trust, fell for a seventh day on Friday to 21.87 million ounces, the lowest since September 2008.

* Also weighing on sentiment, China’s net gold imports from main conduit Hong Kong fell to a 10-month low in June, reflecting weak demand from the major consuming nation.

* Money managers, who have been cooling on gold for some time, last week held more short positions than long ones in the precious metal for the first time in nearly a decade, Bank of America said, suggesting an expectation prices will continue to fall.

* Speculators have confirmed what everyone else has been thinking: expect more falls in commodities, as worries about China and higher interest rates combine with waning sentiment to suggest markets are heading further south.

Source: http://www.bullionbulletin.in

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