MW: Gold tumbles, losses build moving into U.S. open
By Sarah Turner and Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — Gold futures took a tumble in electronic trading on Wednesday, with prices dropping below the key $1,600-an-ounce level as markets awaited a hefty data calendar from the U.S.
Gold for delivery in April GCJ3 -0.72% fell $14.20 to $1,589.50 an ounce in electronic trading in the middle of Europe’s day.
The precious metal fell $5.30, or 0.3%, to settle at $1,604.20 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday for its fourth straight loss, although it managed to hold above $1,600 through the trading session.
HSBC metal analysts said that gold’s fall on Tuesday came as U.S. stock indexes headed back to all-time highs.
“Besides a shift in investor preference towards risk assets over gold, uncertainty surrounding the Federal Open Market Committee’s quantitative-easing program may have also added pressure to bullion,” the analysts said.
The Fed’s FOMC will release the minutes of its Jan. 29-30 meeting later Wednesday, and the HSBC analysts said that gold may see more downside if the minutes show the central bank continued a discussion from its December meeting over whether quantitative easing may either slow or stop well before the end of 2013.
“Bullion may face further pressure should the Fed reinforce their earlier statement towards quantitative easing, in our view. We see gold as likely to face further near-term pressure until physical bullion buying from Asia improves,” the analysts said. Read: Could China ride to gold’s rescue this week?
Among other metals futures, March silver SIH3 -0.79% fell 42 cents, or 1.4%, to $29 an ounce, while March copper HGH3 -0.30% fell 2 cents to $3.63 a pound.
Platinum for delivery in April PLJ3 +0.26% also saw prices fall sharply as gold prices fell, down $41.80, or 2.5%, to $1,655.370 an ounce, while March palladium PAH3 -1.16% fell $11.50 to $754.15 an ounce.
“PGM [platinum group metals] demand may be curbed on reports of lower auto sales in the euro zone,” the HSBC analysts said.
“Automobiles in the euro zone tend to be diesel-fired vehicles which have heavier platinum loadings relative to palladium, when compared with gasoline-fired vehicles. As such, lower European auto demand weighs on platinum more than it does for palladium, in our view,” they said.
Sarah Turner is MarketWatch's bureau chief in Sydney. Follow her on Twitter @SarahTurnerMKTW.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.
