Tag Archives: gold futures

Gold Falls as Dollar Jumps to Three-Year High on U.S. Jobs Data

6 Jul

gold-updatesGold futures fell to a one-week low as the dollar surged to the highest in almost three years after U.S. payrolls rose more than forecast in June, fueling speculation that the Federal Reserve will scale back stimulus.

The greenback climbed as much as 1.6 percent against a basket of major currencies, eroding the appeal of gold as an alternative investment. Payrolls rose by 195,000 workers for a second straight month, the government said today. The median forecast in a Bloomberg survey projected a 165,000 gain. Standard & Poor’s 500 Index futures jumped after the jobs data.

“A better jobs report means there’s less flight to safety,” Brian Booth, a senior market strategist at Long Leaf Trading Group in Chicago, said in a telephone interview. “The initial reaction to the report was a push higher in the dollar and a rise in stocks, and for as long as that continues, gold will struggle.”

Gold futures for August delivery slumped 3.1 percent to settle at $1,212.70 an ounce at 1:46 p.m. on the Comex in New York. Earlier, the price touched $1,206.90, the lowest for a most-active contract since June 28. Trading was 25 percent above the 100-day average for this time, according to data compiled by Bloomberg.

Yesterday, the Comex floor was closed for the Independence Day holiday, and spot gold dropped 0.2 percent. Today, the Dollar Index, a gauge against six currencies, rose to the highest since July 13, 2010.

Silver futures for September delivery tumbled 4.9 percent to $18.736 an ounce on the Comex, the biggest decline since June 20. The metal has dropped 38 percent this year, the most among the 24 raw materials in the Standard & Poor’s GSCI Spot Index.

On the New York Mercantile Exchange, platinum futures for October delivery retreated 1.5 percent to $1,326.40 an ounce, the third straight loss. Palladium futures for September delivery slid 1.2 percent to $677.55 an ounce.

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Charts Show Gold Sell-off Could Get A Lot Uglier

5 Jul

If the yellow metal slides below a key support level of USD 1,150, the selloff could accelerate to USD 1,030 or even USD 870 an ounce – levels not seen since 2008 during the global financial crisis, Victor Thianpiriya, commodity strategist, Asia at ANZ wrote.

mcx goldFrom a technical perspective, the outlook for gold  is looking increasingly bearish, according to analysis by Australia New Zealand Bank (ANZ) , which says the recent sharp declines open the risk of much sharper corrections.

If the yellow metal slides below a key support level of USD 1,150, the selloff could accelerate to USD 1,030 or even USD 870 an ounce – levels not seen since 2008 during the global financial crisis, Victor Thianpiriya, commodity strategist, Asia at ANZ wrote.

“Closing near the lows of the month [June] underscores the risk of much deeper corrective declines… Caution is therefore, key,” Thianpiriya said.

“Volatility remains high. At times like this, the market can ignore fundamentals, and the technical picture takes on greater importance,” he added.

Last week, gold fell to its lowest level since 2010 at USD 1,180, with losses in the precious metal amounting to 22 percent since the start of the aggressive selloff in mid-April.

The yellow metal posted its worst quarterly performance on record, down 23 percent over the April-June period.

Relentless selling by exchange traded funds (ETFs) has been behind the poor performance of the precious metal in the recent months, outweighing physical demand for jewelry, bars and coins.

Thianpiriya noted that a close above USD 1,272 could turn the negative bias in gold around, and allow for a period of rebounds.

However, some strategists believe gold has entered a long term bear market, pointing a tapering of the Federal Reserve`s unprecedented monetary stimulus alongside a benign global inflationary environment as major headwinds for the metal.

Many banks have slashed their forecasts for gold in the recent weeks, the most recent being HSBC, which predicts that the average gold price will be USD 1,396 in 2013, down from USD 1,542.

Among the most bearish, however, is UBS , which warns that gold is at risk of becoming “obsolete” as the Fed winds down its stimulus program . It believes prices could fall to USD 1,150 in the coming 3 months.

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– By CNBC`s Ansuya Harjani
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