Gold prices fell more than 2 percent on Tuesday, pushing below key support at $1,676 an ounce, as jitters over whether private creditors will agree to a Greek bond swap deal pressured the euro, while broader economic worries hit risk appetite. Platinum, palladium and silver were all caught up in the selling, with the platinum group metals on track for their biggest one-day loss this year.
Spot gold touched a low of $1,663.95 an ounce and was down 1.9 percent at $1,673.20 an ounce at 1441 GMT. US gold futures for April delivery fell $30.20 to $1,673.70. The metal hit session lows as Wall Street fell at the open and the dollar rose to a 2-1/2 week high against the euro, with the single currency hurt by worries over a Greek debt swap deal.
Its losses accelerated after the metal broke its 200-day moving average at $1,676 an ounce. Heavy selling was particularly seen in US April gold futures. "It's long liquidation, everyone is trying to get out of the door at the same time," said Afshin Nabavi, head of trading at MKS Finance in Geneva. Stock markets fell and the cost of insuring Greek, Spanish and Italian government debt against default rose on uncertainty over Greece's debt restructuring and a worsening economic outlook, while safe-haven German Bunds rose.
Gold has recently failed to benefit from the safe-haven flows that helped push it to record highs last, year as investors seek the safety of the dollar instead. "Gold this year has been driven by exchange-rate mechanisms. Any dollar strength has not been positive for gold," said Citigroup analyst David Wilson. "At some point, if confidence over Europe evaporates, you would think that should be positive for gold, but you still have to keep an eye on the dollar-gold trade-off."
Gold is extending losses after falling nearly 4 percent last week, the most since mid-December, after Federal Reserve chair Ben Bernanke disappointed financial markets when he failed to signal another imminent round of monetary easing. Data showed gold imports into China from Hong Kong dipped 15 percent in January from the previous month, reflecting slower sales during the Lunar New Year holiday. Hong Kong's gold exports to China in 2011 tripled from a year earlier, showing China's strong appetite for bullion investment.
Silver also sold off in gold's wake, down 3.5 percent at $32.80 an ounce. The gold/silver ratio, or the number of silver ounces needed to buy an ounce of gold, rose back to 50.7 on Tuesday, after dropping to a five-month low at 48.4 last week, as silver underperformed gold in a falling market.
Platinum group metals were the biggest losers, however, coming under pressure from both the stronger dollar and concerns about global growth, which has a greater effect on industrial platinum and palladium than on gold. Spot platinum was down 2.7 percent at $1,615.24 an ounce, off a low of $1,598.70, while spot palladium was down 3.7 percent at $676.22 an ounce.
"Tomorrow's planned nation-wide strike in South Africa and Zimbabwe's rejection of Zimplat's request for an extension in meeting the country's local ownership requirements, are once again raising concerns over global supply of these metals," said Standard Bank in a note. "However, for the moment, these factors are being overshadowed by the dollar strength (off the back of heightened euro zone concerns)." Zimbabwe's state-controlled Herald newspaper said the country is set to announce on Wednesday the fate of Impala Platinum's shareholding in its local unit after latest talks on black ownership ended in deadlock.
Comments
Comments are closed.