MW: Gold tumbles to below $710 as fund sale continues
By Moming Zhou, MarketWatch
NEW YORK (MarketWatch) -- Gold futures fell nearly 4% Thursday to below $710 an ounce for the first time in 13 months, as fund liquidation and the U.S. dollar's rise continued to pound commodity markets for a second day. Copper slumped more than 6%.
Gold for December delivery dropped $27.20, or 3.7%, to $708 an ounce on the Comex division of the New York Mercantile Exchange, trading below $710 for the first time since September, 2007. It fell to as low as $704 in overnight electronic trading.
"Speculative selling continues to hammer commodity prices," said James Moore, an analyst at TheBullionDesk.com. Meanwhile, gold was also "under pressure as the dollar rallied."
Gold's losses followed broad declines in commodity markets. Crude oil was trading lower after the previous session's big drop. Major stock indexes also moved lower.
Gold is often seen as an investment safe haven whose prices tend to rise when the economy falls into troubles, but its recent slumps have defied conventional wisdom. Gold has fallen for 10 out of 11 sessions since Oct. 8 and has lost about $200 an ounce. See related story.
"The fact that gold did not head higher during the current leg of the crisis seems to reflect a combination of the rise in the dollar, deleveraging of commodity positions, sales to meet margin calls, and the unwinding of the long gold, short dollar trade," wrote Natalie Dempster, an analyst at the World Gold Council.
The U.S. dollar continued its rally Thursday, putting more pressures on gold. A rising dollar tends to reduce gold's appeal as an investment alternative. See Currencies.
In exchange-traded funds, gold in the SPDR Gold Trust, the largest gold ETF, stood at 755.64 tons Tuesday, 0.61 tons lower than Monday, according to the latest data from the fund. Gold at SPDR hit record high of 770.64 tons on Oct. 10.
Elsewhere, December copper slumped 11.8 cents, or 6.3%, to $1.7475 a pound. The metal has dropped 42% so far this year, heading for the biggest yearly percentage drop since 1988, when trading data first became available on the Nymex.
Copper is heavily used in cars, homes and appliances and is seen as an economic barometer. See Commodities Corner.
December silver lost 1.1% to $9.36 an ounce. January platinum tumbled 7.5% to $793.30 an ounce, and December palladium fell 3.8% to $173.30 an ounce.
In spot trading, the London gold-fixing price -- used as a benchmark for gold for immediate delivery -- stood at $726 an ounce Thursday morning local time, down $18 from Wednesday afternoon.
