Gold Falls As Fear Sweep Markets

Gold fell by more than 1% on Monday, swept lower by a firm dollar and falls in other financial markets as worries deepened about government debt in Europe and the U.S.

Spot gold was down one percent at $1,709.10, off an intraday low of $1,701.09. It fell 3.5 percent last week, its largest one-week decline in a month.

U.S. gold was down 0.9% at $1,708.8 at 1106 GMT, off an intraday low of $1,704.1.

Gold could find some support from a World Gold Council’s third-quarter demand report showing central bank buying reached nearly 150 tons, far above most analysts estimates.
“Certainly the report would have been very encouraging for gold bulls. Notwithstanding that gold is suffering with risk assets. In the long run we’ll see gold performing well but in the short term you’ll get these anomalies,” Ross Norman, of Sharps Pixley, said. “You would think with the monumental news we’re hearing out of Europe on the economic situation that gold should be running to fresh all-time highs. Gold has these bouts of behaving in a peculiar fashion, and this is one of them.”

Investment interest in gold remained strong last week, despite the 3% price fall, as money managers upped their positions in gold futures and options. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported a rise of 3.631 tons from a day earlier to 1,293.088 tons in its holdings, the highest in more than three months.

Spot silver led the decline in the precious metals complex, down 3% at $31.46.

Platinum was down 1.6% at $1,570.50 and palladium was off 1.8 percent at $596.02.

written by

Rachel Brook is an up and coming financial writer focusing on commodity price inflation and how the overall market reacts to the price swings. She also covers emerging markets in Africa and SE Asia.
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