London: Gold on Thursday dropped to the lowest level since January after reports showed manufacturing may contract from China to Germany and a stronger dollar curbed demand.
Gold fell 0.8 percent to 1,636.88 dollar an ounce, after touching 1,632.45 dollar, the lowest since January 16. Silver also lost one percent to 31.84 dollar an ounce.
China’s manufacturing may contract for a fifth straight month in March, a report showed, hurting the outlook for commodities and sending the Standard and Poor’s GSCI Index of 24 raw materials to a one-week low.
The U.S. dollar rose to a highest level in almost a week against six-currency basket including the euro and the yen. Most of the jewelry stores in India, a biggest buyer of gold remain closed as owners protest against higher taxes.
“At the moment gold is looking weak, investors are coming out of it,” David Govett, head of precious metals at Marex Spectron Group, said today in London. “Data out of China is weaker, so you are going to look for gold imports there to drop. And with the Indian tax increase, the two major buyers of gold got reasons not to buy it. With the stronger dollar and everything else that’s going on in the world, why buy gold at this moment in time?”
The U.S. Dollar Index strengthened 0.3 percent to 79.934, the highest since March 16. Gold typically moves inversely to the greenback.
“On the fundamental front, bullion players remain concerned over a gold import duty hike by the Indian government,” analysts at VTB Capital in London said.