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Forexpros – Gold futures plunged the most in 11 weeks as a surging dollar combined with the Feds refusal to increase stimulus triggered aggressive selling in the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1585.95 a troy ounce during late U.S. trade plummeting 4.64%. It earlier hit a high of USD1645.65.
Gold futures were likely to find support at USD1580.75 and technical resistance exists at USD1597.65.
Increased Italian borrowing costs forced the greenback to 11 month highs against the euro, while the Fed reported the U.S. economy is growing, negating any need for further stimulus.
Fears of decreased demand for precious metals also added to the bearish sentiment.
Bearish fear mongering is rampant, one example is, technical analysis guru, Dennis Gartman telling Bloomberg, “The metal may decline to USD1475, extending a drop from the record high of USD1923.70 set in September to more than 20%, the common definition of a bear market.”
For much of the last year, investor’s typical reaction to bad news from Europe was to buy gold, as its boosts safe haven appeal of the precious metal, but that relationship has unraveled recently.
Instead, gold futures have moved largely in line with other commodities and risk assets over the past month, with investors preferring the relative safety of the U.S. dollar.
Elsewhere on the Comex, silver for March delivery spiked lower by 7.94% to trade at USD28.78 a troy ounce, while copper for March delivery fell 4.72% to trade at USD3.28 a pound.
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