Gold slumped after Swiss voters rejected a plan for their central bank to accumulate bullion and oil extended declines to a five-year low, curbing demand. Silver plunged to the lowest price since 2009 as the US dollar climbed.
Bullion for immediate delivery fell as much as 2.1 percent to US$1,142.88 an ounce, the lowest level since Nov. 7, when it dropped to a four-year low of US$1,132.16. The metal traded at US$1,157.51 at 3:13pm yesterday in Singapore, according to Bloomberg generic pricing. Silver lost as much as 6.7 percent.
Gold posted a third monthly drop last month as the US Federal Reserve ended a bond-buying program that failed to stoke inflation amid lower energy prices.
Crude fell to the lowest price since 2010, as the OPEC took no action to ease an oversupply.
A proposal that would have required the Swiss National Bank to hold a fixed portion of its assets in bullion was voted down by 77 percent to 23 percent in a referendum on Sunday.
“Precious metals have been dragged down by lower energy prices as inflation concerns ease,” said Sun Yonggang (孫永剛), a Shanghai-based macroeconomic strategist at Everbright Futures Co (光大期貨). “Now that the support from the Swiss vote has been removed, the focus shifts back to the Fed and the divergence in monetary policies between the US and other central banks.”
The “Save Our Swiss Gold” measure would have required the central bank to hold at least 20 percent of its assets in bullion, up from 8 percent. Had it been approved, it would have led to purchases of at least 1,500 tonnes over five years.
Gold is on course for the first back-to-back annual drop since 2002 as the Fed moves closer to raising borrowing costs amid an improving US economy, while other central banks add to stimulus. The Bloomberg Dollar Spot Index rose 0.1 percent yesterday, heading for its highest close since March 2009.
Gold for February delivery sank as much as 2.9 percent to US$1,141.70 an ounce on New York’s COMEX, the lowest for a most-active contract since Nov. 7. Holdings in the SPDR Gold Trust fell for a second day on Nov. 28 to 717.63 tonnes, the least since September 2008.
India, the biggest user of gold after China, unexpectedly scrapped rules requiring importers to sell 20 percent of their purchases to jewelers for re-export to remove distortions in shipments and curb smuggling.
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