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Though Chinese gold reserves jumped 57% at the end of June from the last disclosure six years ago, the increase was only half of what the market had expected.
This triggered off a number of stop losses on the gold contracts today.
Apart from these, a spate of positive economic data, waning gold demand, and weak overseas trends continued to tarnish the metal badly. As fears over the Greece crisis fades, gold is losing its allure as a store of value and
an alternative investment to risky assets during economic and political uncertainty.
Further, the divergent monetary policies in the U.S. and the other developed and developing countries will continue to result in appreciation of the U.S. dollar against a basket of currencies.
This would in turn lead to lesser demand for gold.
The bullion has broken its major support level of $1100 per ounce for the first time since March 10 in the early trading session today, suggesting a bleak outlook for the yellow metal. Notably, key gold products like (GLD), (IAU) and (SGOL) lost 5.6% each over the past one month.
While these performances have been bad, things are worse in the gold mining space. Acting as a leveraged play on underlying metal prices, metal miners tend to experience more losses than their bullion cousins in a declining metal market.
Gold Mining ETFs