Forexpros – Gold futures fell sharply on Thursday, dropping to a two-week low as concerns that the euro zone’s ongoing debt crisis was worsening prompted investors to liquidate profitable gold positions to cover losses in other asset classes.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,743.55 a troy ounce during U.S. morning trade, tumbling 1.73%.
It earlier fell by as much as 2.15% to trade at USD1,734.45 a troy ounce, the lowest price since November 3.
Concerns over the euro zone’s debt crisis intensified after Spain’s Treasury sold EUR3.56 billion of 10-year bonds at a yield of 6.97% compared with 5.43% when it auctioned debt maturing in April 2021 last month. The country had set a maximum target of EUR4 billion for the sale.
Meanwhile, France sold EUR3.33 billion of 2016 notes at a yield of 2.82% compared to 2.31% at a similar auction last month, fanning fears over sovereign debt contagion to core euro zone economies.
Following the auction, the European Central Bank resumed purchases of Spanish government debt to ease pressure on borrowing costs.
While the news would have normally boosted the precious metal, investors preferred to sell profitable gold holdings to raise cash and cover losses elsewhere.
Meanwhile, the World Gold Council said earlier that global gold demand rose 6% in the third quarter from a year earlier, as the euro zone’s sovereign debt crisis spurred demand for the precious metal as a haven asset.
Global demand rose to 1,053.9 metric tons worth a record USD57.7 billion in the three months to September. Investment jumped 33% to 468.1 tons, while bar and coin purchases increased 29% to 390.5 tons.
The bar and coin demand in Europe more than doubled to 118.1 tons from 50.3 tons a year earlier and was the most since the fourth quarter of 2008.
According to the data, China accounted for 57% of global purchases in the third quarter. Total gold demand rose 17% in China, while demand in India fell 23%. India and China are the world’s largest gold consumers.
The report also showed that central-bank and government-institution purchases jumped more than six-fold to 148.4 tons in the quarter, on pace to reach the highest amount since 1970.
Elsewhere on the Comex, silver for December delivery plunged 3.05% to trade at a two-week low of USD32.79 a troy ounce, while copper for December delivery fell 1.7% to trade at USD3.425 a pound.
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