LONDON, Nov 12: Gold fell more than 2 per cent on Monday, as weaker oil prices and recovery in the dollar prompted investors to take profits from the metal’s recent 28-year highs.
Bullion also came under pressure on technical selling and a decline in global shares as fears about credit-related losses at financial firms forced investors to reduce bets on risky trades.
Spot gold fell as low as $813.70 an ounce before rising to $814.50/815.30 by 1115 GMT, against Friday’s quote of $832.30/833.10 late in New York and last week’s $845.40 -- the highest since January 1980.
The currency and equities markets are going through another bout of risk reduction as investors continue to worry about subprime related writedowns in the financial sector and the state of the US economy, Tom Kendall, metals strategist at Mitsubishi Corporation, said.
As a result the yen and the dollar are both materially stronger and commodity prices are lower across the board. We may see gold test support at $810 and possibly even $800 before this correction has run its course.
Worries about US financial institutions’ losses from the subprime mortgage crisis, and ensuing credit market turmoil, were renewed on Friday when Wachovia Corp reported a potential $1.7 billion loss on mortgage-related debt.
Gold traditionally has been used by investors as protection against economic and political uncertainty.
The market ignored news that 10,000 miners were on strike at South African mines including Anglo Platinum and Impala Platinum on Monday. The firms said their output had not been affected.
In other metals, silver fell to $15.11/15.16 an ounce from $15.47/15.52 in New York, palladium dropped $3 to $366/369, and platinum fell to a 3-week low of $1,414. It was last quoted at $1,416/1,420, against $1,427/1,431.
The market awaited a report by Johnson Matthey, the world’s largest refiner and fabricator of platinum, on Tuesday on the price outlook and demand and consumption trends.—Reuters
