Any cuts in production in the current environment are unlikely to tighten the gold market immediately, given weak demand. But cost pressures are mounting, as prices have fallen faster than costs.
LONDON(Commodity Online): The scope for rate hikes and a stronger dollar present insurmountable hurdles for gold. Although physical demand has picked up, it has not been sufficient to stem the tide of disinvestment. Risks to gold remain to the downside but ETP holdings could weaken the floor, a report by Barclays stated.
The precious metals complex has started to stabilise and rebound after gold prices have suffered a sharp decline and tumbled to levels last seen in April 2010. The rest of the complex has also been unable to escape unscathed. Platinum prices have breached $1200/oz again, testing levels last seen in July 2009 while silver prices have closed in on $15/oz and levels last seen in February 2010.
“As we have highlighted previously, the strength of the dollar is an insurmountable hurdle for gold and indeed, combined with the last FOMC meeting, the dollar strengthening to levels last seen just over a year ago has placed significant pressure on gold.
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