Gold falls below $1,300/oz, hits lowest since June 24

Gold fell below the psychologically important $1,300 level on Tuesday afternoon in London for the first time since June 24 while the dollar extended gains.

The spot gold price was last at $1,284.25/1,284.55 per ounce, down $28 or around 2.1 percent on the previous close. Trade has ranged from $1,283.90 to $1,313.10 so far.

“If it does not snap back, we could see more long liquidation in gold – a drop to $1,275-1,250 could follow. We should now get fresh insight into how bullish underlying sentiment is or isn’t,” FastMarkets’ William Adams said. “The dip may well, however, give pent-up physical buyers an opportunity to restock.”

The dollar was last at a stronger 96.28 against a basket of major currencies, supported by forecast-beating US data yesterday. The US final manufacturing PMI for September came in at 51.5, close to the expected 51.4, and the ISM manufacturing PMI for September at 51.5 beat the expected 50.4. But ISM manufacturing prices for September and construction spending for August both undershot at -0.7 percent and 53 respectively.

The rebound in the US manufacturing PMI in September after an unexpected drop to 49.4 in August has lifted the odds of a December rate rise. Market participants currently see a 62.1-percent chance of the Fed raising rates in the last month of the year, according to the CME Group FedWatch tool.

Other precious metals were also under pressure. Silver fell to $18.275/18.295, down around 60 cents and its weakest since June 30. Platinum at $991/996 was down $9 – its lowest since June 29 – and palladium fell $3 to $704/709.

(Editing by Mark Shaw)

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