Value of gold falls to lowest in two years

Gold value dropped to its lowest in two years in July, with investors now busy monitoring U.S. economic indicators for clues on the exact time that caused the enhancement in the U.S. interest rates.

Spot gold fell to 0.9 percent at US$1,086.06 (AU$1493.32) an ounce at 3.02 pm EDT on Tuesday. However, on July 24, it was US$1,077 (AU$1480.86), which was the weakest in the past five and a half years. For December delivery, U.S. gold finalised 0.5 percent at US$1, 089.40 (AU$1497.91) per ounce. According to the Thomson Reuters/Core Commodity CRB Index, the metal prices have dropped with 19-commodity, which has now reduced to a 12-year low, thereby removing whatever gains have been earned throughout the decade.

Investors, however, believed there would be enhanced sale on the commodities on Monday after the conditions for Chinese manufacturers reached its weakest in two years.

“The (US) dollar is back on the ascendant today, weighing on all commodity process,” Jonathan Butler, Mitsubishi Corp analyst, said to News Corp. He also mentioned that right now, the main focus is on the U.S' economic data, culminating with payrolls number later this week.

Compared to the leading currencies, the U.S. dollar was 0.1 percent up and thereby cut some profits when the data indicated that consumer spending in June in the States was the least in four months. This resulted in lowering the growth pace of the U.S. manufacturing sector in the month of July.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, depicted that the holdings dropped to its lowest since September 2008, to 21.63 million ounces this Friday. As a result, industrial precious metal prices became a bigger hit than gold.

“What you’re seeing here is part of this structural shift lower in global economic growth being led by China and being reflected in industrial commodity process,” said Mike McGlone, director for ETF Securities in New York.

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