Singapore: Gold and silver extended sharp losses on Monday to trade near their lowest in four years, with a stronger US dollar and possible technical selling likely to keep them under pressure.
Spot gold had dropped 0.7 per cent to $1,165.20 an ounce, stretching its decline into a fourth straight session. It fell to its lowest since July 2010 at $1,161.25 on Friday, before closing down 2 per cent.
Silver was trading near 2010 lows of $15.76 an ounce reached in the previous session. Precious metals took a beating on Friday after the Bank of Japan's surprise decision to boost its already huge bond-buying stimulus, in a stark admission that economic growth and inflation have not picked up as much as expected after a sales tax hike in April.
The move prompted the yen to fall to a seven-year low against the dollar. The dollar index, a measure of strength against a basket of major currencies, hit a four-year peak on Friday. A stronger greenback makes gold more expensive for holders of other currencies, while also dimming the yellow metal's appeal as a hedge. Gold fell through key support at $1,180 an ounce on Friday, sparking fears of a further sell-off.
Spot gold prices are on the verge of sinking below $1,000 per ounce into triple-digit territory for the first time in five years, technical analysts said. The prospect of higher rates in the United States has also hurt gold recently along with strong economic data. Gold is a non-interest-bearing asset.
Outflows from SPDR Gold Trust - the world's largest gold-backed exchange-traded fund - and weak Asian demand have added pressure to gold prices. Holdings of the fund are near a six-year low.
Hedge funds and money managers cut their bullish long position in gold in the week up to October 28, the Commodity Futures Trading Commission said on Friday. The U.S. Mint sold 67,500 ounces of American Eagle gold coins in October, up 21.6 percent from the previous month.
