HONG KONG, Oct 11: Gold bullion sank more than US$4 in a stream of sell orders in Asia on Thursday as investors and traders gave up hope, at least temporarily, of a major war rally on the back of US attacks on Afghanistan, dealers said.
With 50 per cent of gold’s war risk premium slashed in the last 12 hours, the precious metal is expected to traverse the low US$280s in the short term, before the rest of the hedges are removed.
In the short term, and as you can see in the last hour, we have found support at US$281, but I don’t think that is going to hold, said Paul Daniel, corporate dealer at Dresdner Kleinwort Wasserstein in Sydney.
If it does, it will only be for another day or two, then it is back to US$272, Daniel said.
Spot gold sank more than four dollars in Asia on Thursday morning to a low of US$281.00/1.50 as investors followed through with sell programmes begun in New York on Wednesday.
Bullion was last quoted in New York at US$285.20/6.20, well below London’s late Wednesday fix at US$287.15.
Some traders said they saw Asia’s physical buyers returning to the market once the selling pressure subsided, likely around the US$280 level, and still well above the pre-September level of US$272.
People are disappointed and maybe we are seeing a little bit of panic selling, said Greg Fan, dealer at NM Rothschild Hong Kong.
But they are going to realise that all the longs are now out and there will be no sellers left. My gut feeling says US$280 will hold, Fan said.
Also pushing gold lower was the Dow Jones Industrial’s rally, offering a further incentive for investors to switch funds out of gold and into equities, traders said.
The Dow closed 2.08 per cent higher at 9,240.86 on Wednesday.
Volatile gold Aussie tumbled to A$564.73/6.29 anounce, as the Australian dollar slipped below US$0.50 to trade at US$0.4993/98.
Hong Kong tael gold, which is traded on the Chinese Gold and Silver Exchange, ended the morning session at HK$2,621 a tael, down sharply from the open at HK$2,640 and Wednesday’s close at HK$2,662.
Tael gold sank to a low of HK$2,615 in afternoon trade.
Spot silver ended the morning in Hong Kong at US$4.39/4.42 an ounce, down from the open at US$4.41/4.44.
Silver has fallen sharply in US trade on gold’s coattails, just as it piggybacked on the eight per cent flight-to-quality gold spike in the days after the attacks on the United States.
LONDON: Gold prices sagged on Thursday as investors deserted the safe-haven metal for equity markets because of a more optimistic mood about the US-led military strikes on terrorist bases in Afghanistan.
An ounce of bullion changed hands at $282.75 on Thursday the lowest level since the immediate aftermath of the September 11, attaccks, fell again in a partial correction, and then pushed higher again as the United States launched the air and missile campaign over Afghanistan earlier this week.
But he said there was enough uncertainty for gold to remain in the back of investors’ minds.
We would expect consolidation around these levels and still trading in a higher range because the basic condition underlying the strong gold price still holds, he added.—AFP