Swiss vote no on central bank reform, pushes gold prices down

Gold bullion coins known as Krugerrands are pictured in the mint where they are manufactured in Midrand outside Johannesburg. — Reuters pic
Gold bullion coins known as Krugerrands are pictured in the mint where they are manufactured in Midrand outside Johannesburg. — Reuters pic

NEW YORK, Dec 1 — Gold slumped after Swiss voters rejected a plan for their central bank to accumulate bullion and oil extended declines to a five-year low, curbing demand. Silver plunged to the lowest price since 2009 as the dollar climbed.

Bullion for immediate delivery fell as much as 2.1 per cent to US$1,142.88 (RM3,906) an ounce, the lowest level since Nov. 7, when it dropped to a four-year low of US$1,132.16. The metal traded at US$1,149.88 at 9:21 a.m. in Singapore, according to Bloomberg generic pricing. Silver lost as much as 6.7 per cent.

Gold posted a third monthly drop in November as the Federal Reserve ended a bond-buying program that failed to stoke inflation amid lower energy prices. Crude fell to the lowest price since 2010 as the Organisation of Petroleum Exporting Countries took no action to ease an oversupply. A proposal that would have required the Swiss National Bank to hold a fixed portion of its assets in bullion was voted down by 77 per cent to 23 per cent in a referendum yesterday.

“Precious metals have been dragged down by lower energy prices as inflation concerns ease,” said Sun Yonggang, a Shanghai-based macroeconomic strategist at Everbright Futures Co. “Now that the support from the Swiss vote has been removed, the focus shifts back to the Fed and the divergence in monetary policies between the US and other central banks.”

The “Save Our Swiss Gold” measure would have required the central bank to hold at least 20 per cent of its assets in bullion from 8 per cent. Had it been approved, it would have led to purchases of at least 1,500 metric tons over five years.

Dollar strengthens

Gold is on course for the first back-to-back annual drop since 2002 as the Fed moves closer to raising borrowing costs amid an improving US economy, while other central banks add to stimulus. The Bloomberg Dollar Spot Index rose 0.2 per cent today, heading for the highest close since March 2009.

Gold for February delivery sank as much as 2.9 per cent to US$1,141.70 an ounce on the Comex, the lowest for a most-active contract since November 7. Holdings in the SPDR Gold Trust fell for a second day on November 28 to 717.63 metric tons, the least since September 2008.

India, the biggest user of gold after China, unexpectedly scrapped rules requiring importers to sell 20 per cent of their purchases to jewellers for re-export to remove distortions in shipments and curb smuggling.

Silver for immediate delivery retreated to US$14.4235 an ounce, the lowest price since August 2009, and traded at US$14.9115. The metal completed a fifth month of losses in November for the longest such slump since June 2013.

Spot platinum declined as much as 1.5 per cent to US$1,182.63 an ounce, the lowest since November 19, before trading at US$1,189.38. The metal posted a fifth monthly drop in November in the longest losing run since June 2013.

Palladium lost 1.6 per cent to US$796.50 an ounce, halting seven days of gains that was the longest rally since August. — Bloomberg