By Frik Els
Gold struggled on Tuesday losing nearly 1% to a low of $1,313 in lunchtime trade in New York, a more than two-month low. Gold is coming off two-year highs hit early this month and year to date the metal is still up nearly 24% or over $250 an ounce.
Tuesday's leg down was sparked by indications that the US Federal Reserve may be moving sooner on tighter monetary policy than the market had expected. Talk of a rate hike before December lifted government bond yields which have a strong inverse relationship to the gold price and also strengthened the US dollar which usually moves in the opposite direction of gold.
Gold has been drifting lower since the beginning of August as some of the biggest drivers of 2016's surge have begun to lose steam. Large scale gold futures and options speculators or "managed money" investors such as hedge funds have been scaling back bullish bets recently and the frenzied buying of physically-backed gold ETFs have also moderated.
Worries about a significant correction for the gold price saw investors pull money out of the sector on Tuesday with gold mining stocks coming in for particular punishment.
The world's most valuable gold mining company, Newmont Mining (NYSE:NEM) shed 5.2% in afternoon trade bringing the Denver-based company's decline for August to double digits. Newmont, the only gold company that forms part of the S&P500 index, recently surpassed Toronto's Barrick Gold as the gold mining company with the top market capitalization in New York at $21.1 billion.