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Gold tumbles through resistance levels as dollar surge continues

Last updated: 01:45 06 Nov 2014 AEDT, First published: 02:45 06 Nov 2014 AEDT

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Gold took another hammering overnight as the dollar soared higher after victory for the Republicans in the US mid-term elections.

The metal is now at its lowest for more than four year low and has retreated 40% from the highs seen in 2011.

ANZ Bank said the spark for the latest downgrade was the decision by the Bank of Japan to launch more stimulus measures, a move that sent the Yen spinning lower against the US dollar.

Concerns that the ECB is set to follow suit has further depressed the euro at a time when the US has ended its monthly bond buying programme and is looking at raising interest rates.

Some observers believe that victory for the Republicans may force the US Federal Reserve to speed its tightening programme with some newly elected senators already calling for an audit of the Fed to assess the success of recent policies. 

Strong US economic data also took its toll with ADP’s private sector jobs report indicating 230,000 new positions were added in October, a number that bodes well for non-farm payrolls on Friday, traders said.

An hour into trading on Wall Street, spot gold was US$25 lower at US$1,143 with heavy falls recorded by silver, which shed US$0.66 to US$15.37, and platinum, which plummeted below US$1,200 for the first time since October.

ANZ added there was little sign of physical buyers stepping in to take advantage of the low gold price. Sentiment may have been affected by a Chinese investigation of round-tripping of metal shipment into Hong Kong, but even allowing for that the “Chinese gold consumer is well and truly on the sidelines for the moment,” it said.

“We saw a pickup in physical demand in September which continued through most of October. However, this seems to have dried up once more despite the continued decline in price.”

ANZ added: “The bears seem to be well and truly in charge. Near term, it is hard to argue otherwise.”

Major movers

Randgold Resources down 51p at 3,578p

Fresnillo down 16p at 682p

Anglo American down 10p at 1,315p

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