Capital Gold Group Report: First Day of Q2 = Buying Opportunity in Gold
Dollar's temporary "come-back" creates strong buying opportunity in gold.
Gold for June delivery tumbled $41.80, or 4.5%, to $879.70 an ounce on the New York Mercantile Exchange.
Other metals futures were also sharply lower, with platinum selling off 7%.
The Reuters-Jefferies CRB index, a benchmark barometer gauging the
prices of major commodities, fell 1.7% to 380.47.
"Everything
from cotton to copper and soybeans to silver is off sharply," said Jon
Nadler, senior analyst at Kitco Bullion Dealers. "The ever-weakening
dollar had prompted many a fund to pile money into the sector since
September last year, pushing values of some commodities well beyond
fundamentals."
"But now, as the dollar
is staging somewhat of a comeback, even if a temporary one, the niche
is being drained of money quite fast," Nadler said.
With perceptions that
the credit freeze might be thawing, hedge funds appear to be turning
away from until now ultra-hot commodities, he said.
Zachary Oxman, senior
trader at Wisdom Financial said: "You're seeing heavy selling pressure
and significant technical damage [in gold prices]."
"I'd look for further selling into the $870 level at this time," Oxman said.
Culminating a tumultuous quarter, the benchmark gold contract lost $15,
or 1.6%, to end Monday's trading back at $921.50 an ounce.
For March as a whole,
gold futures lost $50.60 -- a drop of 5.2%. But for the first quarter,
the precious metal still turned in a stellar performance, gaining
$86.60 an ounce, a 10.3% increase.
"Given gold's recent
movements, the yellow metal will remain vulnerable to selling pressure
in the coming sessions," said James Moore, analyst at
TheBullionDesk.com.
In a research note,
Moore cited how the second quarter's "traditionally weaker than the
first due to general market cycles."
The dollar extended
gains Tuesday after the Institute for Supply Management's manufacturing
index unexpectedly inched higher to 48.6% in March from 48.3% in
February. The euro was already under selling pressure after earlier
news that Swiss banking giant UBS announced a further $19 billion
wrote-down.
The dollar index, which
tracks the performance of the greenback against a basket of other major
currencies, soared 1.1% to 72.69.
Platinum tumbles 7%
Led by platinum, other metals futures also posted sharp losses on the
Nymex. July platinum futures tumbled $144.60, or 7%, to $1,898.80 an
ounce.
May silver futures fell
88 cents, or 5%, to $16.43 an ounce and June palladium fell $23.70, or
5%, to $426.50 an ounce. May copper futures dropped 10 cents, or 3%, to
$3.73 a pound.
Crude-oil futures also dropped sharply.Capital Gold Group, gold, gold prices, gold demand, gold futures, gold bull market, dollar bear market, four digit gold, U.S. Recession, inflation, gold investments, silver investments, platinum, precious metals, gold futures, New York Mercantile Exchange, gold consolidation
