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PRECIOUS-Gold tumbles again on dashed QE hopes, technicals
March 14, 2012 / 4:12 PM / 6 years ago

PRECIOUS-Gold tumbles again on dashed QE hopes, technicals

(Updates comment, market activity, adds details)	
    * Gold falls to lowest since mid-Jan, giving up QE premium
    * Technical selling weighs, could test December lows
    * Platinum premium over gold increases
    * Coming up: U.S. jobless claims, producer prices Thurs

    By Frank Tang and Veronica Brown	
    NEW YORK/LONDON, March 14 (Reuters) - Gold fell more
than 2 percent in a second straight decline on
 Wednesday, hit by technical selling and investors quitting
bullion trades a day after the Federal Reserve upgraded its U.S.
economic outlook and offered few clues on further easing.	
    The 5 percent or $80 per ounce slide over two days has
removed the premium gold enjoyed based on expectations of
further U.S. monetary easing to stimulate the economy. The
precious metal has now erased gains made since late January when
the Fed said it would keep interest rates for the next several
years.     	
    Gold is down almost 9 percent since late February. Some
funds appear to have closed out of their bullish gold bets,
fearing the Fed could be done with quantitative easing after a
string of improved data, including employment and retail sales. 	
    Gold, which has appeared to lose its safe-haven appeal and
has taken to trading in tandem with riskier assets, was also
pressured by encouraging stress tests on most U.S. banks. Silver
also tumbled around 5 percent.	
    Some analysts said gold could fall further after it crashed
below its 200-day moving average, a key technical support during
its three-year bull run. Several sudden corrections since last
September have also shaken investor confidence in the
traditional safe haven.	
    "I think it's not yet (time to buy gold), not necessarily
because it's going to drop another 5 to 10 percent, but rather
we are now technically in a downtrend," said Oliver Pursche,
managing partner of GMG Defensive Beta Fund.	
    Spot gold was down 2.4 percent at $1,634.39 an ounce
by 3:21 p.m. EDT (1921 GMT), having hit a low of $1,634.09 - its
lowest since Jan. 16. 	
    U.S. April gold futures settled down $51.30 at
$1,642.90 an ounce. Trading volume was 70 percent above its
30-day average, set to be one of the busiest days in the past
six months.	
    Year to date, gold is still up 5 percent after 11
consecutive yearly gains, while silver is 15 percent higher
after posting a 10-percent decline last year.	
    With bullion trading well below its 200-day moving average,
gold's next support should be in the $1,625 area near its lows
in mid-January, analysts said.	
    "Technical momentum is a powerful short-term market mover
and could take the price through $1,600 to re-test Decembers low
at $1,523," said Janet Mirasola, managing director of futures
brokerage R.J. O'Brien.	
    Gold briefly entered a bear market in December after it had
plummeted more than 20 percent from its all-time high at above
$1,920 an ounce in September.	
    	
    BANK STRESS TEST WEIGHS	
    Also pressuring gold prices was news most of the largest
U.S. banks passed their annual stress test, underscoring the
recovery of the U.S. financial sector. 	
    Silver, which had sharply outperformed gold so far
this year, fell 4.7 percent to $31.80 an ounce.	
    Lackluster investment demand weighed heavily on silver
prices, and silver fabrication demand has not caught up with a
strengthening economic outlook, said Erica Rannestad, precious
metals analyst at CPM Group.	
    Rannestad is forecasting a quarterly average price of $28.90
an ounce by the fourth quarter, about 10 percent below current
prices.	
    An improving U.S. industrial outlook, however, was reflected
in the performance of platinum and palladium due to their use in
car production. 	
    Platinum is enjoying a premium of around $30 to gold, after
supply worries helped it reverse its unusual discount to
bullion. Since Tuesday, platinum has been back in pole position,
which marked the first time since September.	
    Platinum was last down 1.2 percent at $1,661.49 an
ounce, while palladium fell 1.4 percent to $690.	
 3:21 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1642.90 -51.30  -3.0  1634.70 1682.80  247,313
 US Silver MAY  32.181 -1.400  -4.2   31.625  33.470   66,708
 US Plat APR   1675.30 -26.50  -1.6  1662.40 1706.20    9,177
 US Pall JUN    697.45 -11.40  -1.6   692.25  711.00    2,068
 
 Gold          1634.39 -40.36  -2.4  1634.09 1681.95         
 Silver         31.800 -1.580  -4.7   31.650  33.430
 Platinum      1661.49 -19.94  -1.2  1665.50 1701.50
 Palladium      690.00 -10.10  -1.4   693.00  706.50
 
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        295,456   176,343   193,964     19.54   -0.67
 US Silver       73,624    67,392    73,469      32.8   -0.38
 US Platinum     11,747     8,504     8,303     21.61   -1.98
 US Palladium     2,078     5,469     4,667                  
 
 	
    	
	
 (Editing by Alden Bentley and Marguerita Choy)

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