Goldprices tumbled to their lowest in over four months yesterday after extending their decline in the wake of sweeping US tax cuts but the worst could be yet to come for the precious metal.
Its price slipped to $1,251.68 per ounce, its lowest since July, as the dollar strengthened and investors pulled out of the safe haven on growing optimism over Donald Trump’s corporate tax cuts.
After sliding 2.3pc this week, today’s US labour report and the US Federal Reserve’s monetary policy meeting next Wednesday could ramp up the pressure further on the precious metal. Loose monetary policy among the central banking elite since the financial crisis have kept gold prices inflated but tightening policy at the Fed, ECB and Bank of England has started to crank up the pressure on gold.
Traders have almost completely priced in an interest rate rise to 1.5pc at the Fed’s next meeting but gold could sink further if the central bank’s policymakers send hawkish signals to the markets and boost the probability of a quickening pace of rate rises.
The rout in prices could also be exacerbated by the prospect of a “Santa rally” over the festive period increasing the demand for riskier assets, IG market analyst Chris Beauchamp argued.
Its worst weekly performance since July came as cryptocurrency Bitcoin - which has been touted as an alternative safe haven to gold - surged over 20pc, smashing through the $16,000 per Bitcoin milestone.
Elsewhere, gambling software firm Playtech plunged as much as 8.3pc on fears that its revenues could be knocked by GVC’s takeover of Ladbrokes Coral.
The two bookies revealed that they are in advanced talks over a potential £3.9bn deal with the final sum depending on the outcome of the Government’s review on maximum stakes on Fixed Odds Betting Terminals. Ladbrokes is one of Playtech’s most important licensees but GVC has indicated that it will use its own technology in the merged group. Investor jitters eased as trading progressed and Playtech clawed back its heavy early losses to close just 16p lower at 830p.
Building materials giant CRH climbed 2pc in intraday trade after it pulled out of the race to snap up PPC, South Africa’s biggest cement maker. The firm gave up its gains late on and finished flat, 1p higher at £25.80.
Costa Coffee owner Whitbread pulled back 62p to £39.28, a day after activist investor Sachem Head Capital sent shares soaring by revealing a 3.4pc stake. Defence struggler Babcock International slipped 23.5p to 654.5p to the bottom of the FTSE 100 after it went ex-dividend with the wider index sinking 27.29 points to 7320.75 as stocks rebounded on the Continent.