FRX: Gold futures plunge to 6-day low as risk sentiment improves
Forexpros – Gold futures were down heavily on Wednesday, plunging to a six-day low as a rebound in global equity markets dented the appeal of the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,802.25 a troy ounce during U.S. morning trade, plunging 3.65%.
It earlier fell as much as 4.05% to trade at USD1,792.75 a troy ounce, the lowest price since August 30.
Global equities rebounded from three straight days of losses on Wednesday, with European stock markets posting sharp gains, while U.S. equities were broadly higher after the open, denting the safe haven appeal of the precious metal.
Media outlets reported earlier that President Obama planned to propose a USD300 billion stimulus package to bolster the U.S. economy and spur job growth when he addresses a joint session of Congress on Thursday.
Meanwhile, Germany’s Federal Constitutional Court rejected lawsuits aimed at blocking the country's participation in euro zone bailouts, but added that the country’s budgetary parliament committee must provide approval before any future decisions on granting bailout aid.
Despite the sharp pullback, gold prices were expected to remain supported in the long-term amid ongoing concerns over the euro zone’s sovereign debt crisis and worries over the U.S. economic outlook.
Global financial service provider UBS said in a report earlier that “gold's drop of nearly USD100 in 24 hours from a new record is difficult to rationalize.”
Gold prices surged to an all-time high of USD1,921.05 a troy ounce on Tuesday, leading to some profit-taking.
Gold traders were awaiting the release of the Federal Reserve’s Beige Book later in the day, while speeches from Chicago Fed President Charles Evans and San Francisco Fed Chief John Williams will be closely watched for any hints regarding further easing measures.
Elsewhere on the Comex, silver for December delivery tumbled 2.5% to trade at a seven-day low of USD40.82 a troy ounce, while copper for December delivery jumped 1.62% to trade USD4.130 a pound.
