Gold price tumbles in market correction
By Xiao Feng |
August 26, 2011, Friday
|
Print Edition
Print Edition
SHANGHAI gold prices tumbled yesterday in a wide correction of the precious metal globally.
Spot gold prices at the Shanghai Gold Exchange, the sole gold exchange in China, slumped 7 percent to 10,100 yuan (US$1,620) an ounce yesterday, echoing a drop in the gold price of 5.6 percent to US$1,757.30 an ounce in New York on Wednesday, the biggest daily drop since March 2008. The price continued to fall during after-hours trading to below US$1,720 an ounce.
Zhu Suike, an analyst at China Futures, said: "Profit taking was huge - exchange-traded funds are selling gold in large amounts. The possibility that the US will stimulate the financial market reduces risk aversion."
The maximum daily price at the Shanghai bourse rose to 9 percent from 7 percent yesterday to reflect the wide fluctuation in the price.
Shanghai yesterday joined several other bourses in increasing the trade margin requirement for gold forward contracts for the second time in a month to curb volatility.
But Zhu said it is a good opportunity to buy, as a weaker US dollar and higher inflation in the US and China will support gold prices long term.
The World Gold Council said in a report last week that demand for gold rose 25 percent in China in the second quarter compared with last year despite gold prices rising 26 percent. Swiss investment bank UBS on Wednesday raised its forecast for short-term gold trading for the second time this year to a range of US$1,724 to US$2,200 an ounce.
Spot gold prices at the Shanghai Gold Exchange, the sole gold exchange in China, slumped 7 percent to 10,100 yuan (US$1,620) an ounce yesterday, echoing a drop in the gold price of 5.6 percent to US$1,757.30 an ounce in New York on Wednesday, the biggest daily drop since March 2008. The price continued to fall during after-hours trading to below US$1,720 an ounce.
Zhu Suike, an analyst at China Futures, said: "Profit taking was huge - exchange-traded funds are selling gold in large amounts. The possibility that the US will stimulate the financial market reduces risk aversion."
The maximum daily price at the Shanghai bourse rose to 9 percent from 7 percent yesterday to reflect the wide fluctuation in the price.
Shanghai yesterday joined several other bourses in increasing the trade margin requirement for gold forward contracts for the second time in a month to curb volatility.
But Zhu said it is a good opportunity to buy, as a weaker US dollar and higher inflation in the US and China will support gold prices long term.
The World Gold Council said in a report last week that demand for gold rose 25 percent in China in the second quarter compared with last year despite gold prices rising 26 percent. Swiss investment bank UBS on Wednesday raised its forecast for short-term gold trading for the second time this year to a range of US$1,724 to US$2,200 an ounce.
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