Johannesburg - The gold spot price touched $1 304 (R18 832) an ounce yesterday - the weakest since the beginning of last month when it traded at $1 316 an ounce.
The fall of bullion comes amid jitters of the possibility of a US rate hike in December and the firming of the US dollar.
The precious metal, which is perceived as a safe haven for investors and is sensitive to increases in US interest rates, fell after Federal Reserve officials issued a hawkish note on interest rates at the weekend boosting the dollar.
Vunani Private Clients trader Roberto Pietropaolo said the recent dollar rally had put pressure on commodity prices. The lower gold price has also put pressure on local gold stocks.
Gold Fields fell 3.58 percent to R75.11, Sibanye Gold lost 2.78 percent to R57.03, while AngloGold Ashanti softened 2.92 percent to R239.78 and Harmony 2.83 percent to R52.44.
“They (gold companies) need a stable gold price.
“I do not think that the weakening of the rand will protect the gold producers. As you know a stronger dollar price is bad news for gold,” Pietropaolo said.
Although bullion has lost steam this month, it has surged 24 percent this year from lows last year, boosted by investors piling into the safe haven following Brexit.
As a result of the strong gold spot price, gold producers posted record profits and their share prices have surged.
Matthew Turner, an analyst at global investment bank Macquarie, said on Tuesday that the precious metal had shown one of its strongest performances in years, up 24 percent in the year to date, a figure tested only in 2011.
“Yet if we step back, the mystery is not so much why the gold price is strong, but why it is weak,” Turner said. “At $1 318 an ounce it is below its all-time high of $1 895 an ounce, reached on September 2011, and even this year’s peak of $1 366 an ounce was short of 28 percent.”
Appreciation
Turner argued that the gold price would continue to appreciate in the medium term, but its gains would more likely be steady than spectacular.
“The previous high seems out of reach, while the dollar remains strong and the US economy is on a solid footing, though concern over both will provide a firm underpinning.
“Usually how much gold can go up by might finally depend on supply demand 'fundamentals', and while likely to improve, they will do so slowly.”
Turner said in the note that gold was below $2 000 an ounce because it started from a low base as it reached a recent low of just below $1 050 an ounce in December, more than half of that 2011 peak.
He also said that the macroeconomic backdrop was less supportive, “and this boils down to the fact that the US economy and the economic outlook is not in the same dire straits that it was in 2011”.
* With additional reporting by Reuters
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