Gold has been slowly declining over the past week as strengthening equities have led investors to move out of the safe-haven investment. More news of economic recovery in the United States, a stagnant situation between Russia and Ukraine, and weaker-than-expected demand from Asia has also contributed to the drop.

Gold fell to a low of $1,277.10 on Tuesday, its lowest since February 11th, and was trading at $1,282.50 per ounce at the time of this article on Wednesday. The main driver of the drop this week was the release of U.S. data showing that home prices rose in February and sales of existing homes were a bit stronger than expected.

Additionally, the anticipated high demand for the yellow metal in Asia has failed to emerge because buyers are expecting even lower prices.

A dealer in Hong Kong told The Star Online, “I thought some demand would emerge when prices fell below $1,300 but I was surprised to see no strong buying interest.”

China has also been attempting to strengthen the value of yuan in its bid to make it the world’s reserve currency by making it more expensive to buy dollar-denominated gold.

Learn How to Avoid Costly Rookie Mistakes & Invest in Gold Like a Pro!

Get Free Gold Investor Guide

Yuichi Ikemizu, branch manager for Standard Bank in Tokyo, told The Star Online that, “There is support at $1,275. But if we break that level, we are going to fall to $1,250. The market is bearish right now because there are no physical buyers even at the sub-$1,300 level. Selling by exchange-traded funds (ETFs) is also a negative.”

The SPDR Gold Trust ETF, the world’s largest gold-backed ETF, has seen outflows of 9.3 tons in the last week alone, which has erased all the gains made so far this year. According to The Star Online, “Traders said persistent outflows from the top ETF could make any gains in prices hard to hold.”

Investors may be viewing this recent drop as a chance to buy-low. The U.S. economy is far from stabilized and tensions between Russia and Ukraine remain high 1. China and India still have a huge appetite for gold that will begin to emerge once analysts start to agree that a bottom has been reached.

Additional Sources

1 – http://news.yahoo.com/biden-pledges-support-ukraines-pro-western-leaders-094545214.html