Gold futures in New York settled 2.2 percent lower on Tuesday in a sell-off sparked by a stronger US dollar and lower equity markets and oil prices, traders said.
Gold for August delivery fell $14 to finish at $634.70 an ounce at the New York Mercantile Exchange's Comex division, after zigzagging between $649.40 and $630.50. The day's low marked gold's softest price since last week, when it hit a six-week low at $624. Gold has a strong negative correlation to the dollar.
Wayne Muddy, the head of Newmont Mining Corp, said at the Reuters Global Mining and Steel Summit in New York that there is a long way left in the current run of high prices, partly due to prospects that production is likely to be flat or in decline over the next 5-10 years.
Asked about a price forecast of $850 per ounce for gold made last month by the chairman of the World Gold Council, Pierre Lessened, he said that "doesn't sound unreasonable". Ian Teller of Goldcorp said the price could pass the 1980 highs above $800 and was unlikely to go below $500 for a "long, long time."
Prudential, meanwhile, pared its gold price view for 2006 to $600, from $626 previously. Comex gold in January 1980 spiked to its all-time high of $872 an ounce, at a time when bullion reached a record $850.
Spot gold was last quoted at $629.80/630.80 an ounce versus on Monday's New York close at $643.00/644.00. On Tuesday's afternoon bullion fix in London reached $627. Comex July silver ended at $11.8450 an ounce, off 45 cents or 3.66 percent, within a $12.2950 to $11.58 range.
Spot sank to $11.83/11.93, from $12.32/42. It fixed at $11.87. Over at Nymex, July platinum fell $22.60 to $1,235.90 an ounce. Spot platinum fetched $1,231/39. September palladium shed $12.95 to finish at $351.05 an ounce.
Spot was at $344/349 an ounce.
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