US gold futures fell 2 percent on Tuesday as sharply lower platinum prices tempted investors to lock in profits following bullion's recent sharp rally. Gold for June delivery was down $18.70, or 2.1 percent, at $889.50 an ounce at 10:54 am EDT (1454 GMT) on the COMEX division of New York Mercantile Exchange. Ranged from $884.60 to $907.70.
Gold market is taking cues from heavy losses in platinum and palladium due to fears about the viability of US automakers, said Jeffrey Christian, managing director of CPM Group. Strong desire by investors to take profits more than offset safe haven buying in gold amid renewed bank worries and a possible pandemic from swine flu, said traders.
Sellers in gold emerged in overnight sessions as funds were more interested in raising cash and cutting exposure following Monday's May option expirations, said George Gero, vice president of RBC Capital Markets Global Futures. COMEX estimated 10 am electronic futures volume at 59,718 lots. Floor volume was not available due to technical difficulty.
Spot gold traded at $888.65 an ounce, down 2.1 percent from its late Monday quote in New York. The London afternoon gold fix was $891.00 an ounce. COMEX May silver down 60.0 cents, or 4.6 percent, at $12.355 an ounce, following gold's weakness. Ranged from $12.330 to $12.950. COMEX estimated 10 am electronic futures volume at 12,138 lots. Spot silver was at $12.36 an ounce, down 4.1 percent from its previous finish.
The London silver fix at $12.560 an ounce. NYMEX July platinum slides $58.00, or 5.0 percent, to $1,092.30 an ounce, after hitting a session low of $1,071.10, which marked the weakest price since March 19. Uncertain future of US automakers took a toll on platinum group prices, said traders.
General Motors on Monday said it planned aggressive restructuring moves that would see the automaker emerge under the ownership control of the US government and its major union. Platinum and palladium are used to clean exhaust fumes from the tailpipes of vehicles. Spot platinum at $1,085.00 an ounce, down 4.7 percent from its late Monday quote. June palladium down $11.20, or 4.9 percent, at $217.75 an ounce. Spot palladium was at $213.50 an ounce, down 4.3 percent from its previous finish.