Gold prices sink

LONDON. Gold prices sank to six-month lows yesterday as investors sold holdings in the physical market and the dollar climbed due to expectations of higher interest rates in the United States.

Spot gold was down 0,2 percent at $1 265,4 an ounce at 1501 GMT but off a low of $1 261,36, its weakest level since 20 December.

It has lost more than 7 percent since an April high above $1 365 an ounce US gold futures were down 0,5 percent at $1 267,3 an ounce.

Holdings of the largest gold-backed exchange traded fund (ETF), the New York-listed SPDR Gold Trust have fallen nearly five percent to 26.645 million ounces since late April.

That trend is reflected in other U.S. based ETFs.

“Uncertainty would normally fuel demand for gold as a safe haven, which we would see in the physically backed products, but instead we are seeing outflows from the U.S. products,” said Julius Baer analyst Carsten Menke.

“From the perspective of a U.S. investor, focused on the domestic market and economy, the threat from trade tensions is much lower than in Europe. U.S. domestic consumption is a major driver of growth and there isn’t a problem there.”

That, Menke said, is why the Russell 2000 equity index, which comprises of small US -listed companies, and the Nasdaq index of technology firms, are at record highs.