A mix of factors contributed to gold dropping below $1,650/oz yesterday. Domestic retail sales showed anemic growth over January, the week-long Chinese Lunar New Year slowed gold purchases, and other investors held their breath for a G20 meeting scheduled this week. It’s widely expected that the meeting will produce guidance for gold in the near future.
Moreover, the U.S. S&P 500 rose to its highest intra-day level since late 2007, causing investors to shift away from gold and other commodities.
“More money is piling into the equities and real estate as the economy is getting better. It doesn’t bode well for gold which is not rising with the stimulus programs in China and Japan,” said Bruce Dunn, vice president of trading at precious metals dealer Auramet.
Spot gold was down to $1,641.74/oz in the afternoon. Gold futures for April were down to $1,645.10/oz.
According to the Commerce Department, tax increases and high gas prices contributed toward curbing retail sales growth over the past month.
As for the G20, finance ministers and governors of central banks are due to meet on Friday in Moscow, and currency policy debates are expected to feature strongly. It’s very likely that the news emerging out of Moscow will influence gold’s position in the market over the coming weeks.