Forexpros – Gold futures were down sharply on Monday, as the U.S. dollar rallied against its major counterparts after Japan intervened to curb the yen’s strength for the third time this year.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,715.85 a troy ounce during late Asian trade, dropping 1.8%.
It earlier fell by as much as 2.1% to trade at USD1,706.25 a troy ounce, the lowest price since October 26.
Earlier Monday, Japanese officials launched an intervention to curb the appreciation of the yen after the dollar fell to a record low of JPY75.56 in early trade.
Japanese Finance Minister Jun Azumi said Tokyo had acted on its own and would keep intervening until it was satisfied with the results. Azumi added that he ordered the intervention because “speculative moves” in the currency failed to reflect Japan’s economic fundamentals.
The greenback jumped nearly 4% against the yen, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 1.23% to trade at 76.12.
Dollar strength usually weighs on gold, as it dampens the precious metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Some mild profit-taking also pressured prices, as last week’s 6.8% rally prompted some investors to sell their position and lock in gains.
Despite the drop, gold prices were expected to remain supported as concerns over the euro zone’s debt crisis re-emerged after ratings agency Fitch said Friday that writedowns on Greek debt would indicate a default, while Italy’s borrowing costs rose to a euro lifetime high.
Elsewhere on the Comex, silver for December delivery tumbled 2.27% to trade at USD34.48 a troy ounce, while copper for December delivery dropped 2.67% to trade at USD3.607 a pound.
French lender Credit Agricole said earlier that small-sized silver bars and coins have dominated festival sales in India as investors prefer the less-expensive metal to gold. India is the world’s largest consumer of precious metals.
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