Gold prices declined Monday with investors turning to other asset classes after reports of an expanding Chinese factory sector and a rising dollar reduced demand.
Spot gold fell 0.3% at $1,459.94 per ounce at 0645 GMT. Prices had earlier reached highs dating back to Nov. 22. U.S. gold futures declined 0/5% to $1,466.
An expansion in factory activity during November in China, which ranks as the world’s second largest economy and biggest consumer of gold, led investors into equity markets.
“Positive data from China creates an optimism that the Chinese market is improving, that gives people confidence to invest in riskier assets, and in turn, reduces the safe-haven demand for gold,” said Hareesh V, head of commodity research at Geojit Financial Services.
The rising dollar also placed pressure on gold. In recent months, the United States and China trade dispute had led investors into safe havens such as gold. When the U.S. issued legislation in support of Hong Kong protesters, and China demanded the United States decrease its tariffs, trade talks stalled.
“Nothing particularly has really changed (on the trade front) from last week, the market remains in the dark about how things will progress. Investor appetite for gold is just waning a little bit on lack of direction,” ANZ analyst Daniel Hynes said.
Gold has increased more than 13% this year mainly due to the trade dispute war driving demand for safe assets.
“The fundamentals are still quite supportive, this lull is not going to last too much longer. Maybe into year end we will see gold prices recommit the uptrend we saw earlier this year,” Hynes said.
Silver sunk 0.6% to $16.93 per ounce.
The SPDR Gold Shares exchange-traded fund (Ticker: GLD) generally tracks the price of bullion. It fell 4.1% in the three months preceding Nov. 29.
to a gain of 7.3% for
The SPDR S&P 500 (SPY) ETF, tracking the S&P 500 stock index, gained 7.4%, not counting dividends.
“The specs [speculators] keep increasing longs, not decreasing them,” writes Rick Bensignor in his Bensignor Investment Strategies financial newsletter.
Speculators have six times the amount of bullish bets on gold than bearish bets. “That keeps me bearish [on] gold,” he writes.