Forexpros – Gold futures were sharply lower on Thursday, falling to a three-day low as mounting concerns Italy’s debt crisis prompted investors to sell their gold positions to raise liquidity.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,762.15 a troy ounce during early European morning trade, tumbling 1.65%.
It earlier fell by as much as 0.25% to trade at USD1,755.15 a troy ounce, the lowest price since November 7.
Concerns over the euro zone’s ongoing debt crisis intensified after the yield on Italian 10-year government bonds soared to a euro-lifetime high of 7.48% on Wednesday, above the 7% level which prompted Greece, Ireland, and Portugal to seek international bailouts.
Italy was to auction up to EUR5 billion of one-year government bonds later in the day in what will be a key test of market appetite for the country’s debt.
Meanwhile, officials in Greece were continuing with talks aimed at appointing a new coalition government.
While the news would have normally boosted the safe haven appeal of the precious metal, investors preferred to sell profitable gold holdings to raise cash and cover losses elsewhere.
Asian stock markets plunged, tracking steep overnight losses from Wall Street, with the Hang Send Index tumbling 5.4%, while Japan’s Nikkei 225 Index sank 2.9%.
European stock indices were sharply lower after the open, while U.S. stock futures also pointed to heavy losses.
Gold is considered a refuge from financial risk, but prices can tumble amid a market-wide selloff as traders sell profitable holdings to raise cash and cover losses elsewhere.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.15% to trade at 78.25.
Gold prices often move inversely to the U.S. dollar, as gold becomes less expensive for buyers using other currencies.
Elsewhere on the Comex, silver for December delivery plunged 2.05% to trade at USD33.65 a troy ounce, while copper for December delivery tumbled 2.55% to trade at USD3.354 a pound.
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