Spot gold fell 5.2 percent and silver dropped by the most in three years, extending Friday's rout as investors bolted for the ultimate safe havens of cash and the dollar. A debt crisis in the eurozone that could infect the global economy is causing a widespread flight to safety that has hammered commodity markets across the board.
Spot gold dropped to an 11-week low of $1,534.49 an ounce before edging back to $1,558.39 by 0706 GMT, bringing losses so far this month to nearly 15 percent, the biggest decline since the financial crisis in October 2008. Spot silver was down 16 percent at one point to a low of $26.04, its weakest since November last year, before bouncing back to $27.97, a fall of just under 10 percent. The metal has lost more than a quarter of its value in just three sessions.
"Many have highlighted the risks of gold being in overbought territory, having gone up in a straight line in the past four years," said Song Seng Wun, a regional economist at CIMB Research in Singapore. Spot gold is approaching key support at the 200-day moving average of $1,526.58, while the Relative Strength Index dipped below 30, seen as an indicator that the market is oversold. US gold futures fell 4.7 percent to $1,563.40 an ounce, and US silver tumbled as much as 13 percent to $26.15.
Spot gold fell 8.6 percent last week, its sharpest such drop in more than 28 years. In 2008, spot gold prices initially shot up after Lehman Brothers' bankruptcy, but soon tumbled more than 25 percent within two weeks in October. Holdings in the world's large.
Comments
Comments are closed.