Gold Prices Extend Losses, Silver Plunge More Than 10%
Gold prices continued to sink deeper in the bear territory during Asian trading hours on Monday as edgy investors kept offloading the metal fearing more losses following previous session’s sharp decline in prices; however, dealers are expecting some sort of rebound as it lies in the oversold territory. Silver prices also tumbled in early trading on Monday.
Adding to the woes was an unexpectedly weak GDP data from China. Earlier today, a data release showed that the Chinese economy grew at a slower-than-expected rate in the first quarter of 2013, triggering across-the-board sell-off.
While Asian equities were trading sharply lower, crude oil futures tumbled almost 3%. Other industrial metal and commodities fell sharply as well.
At last check, U.S. gold futures for June delivery tumbled 7.29% to $1,391.90 an ounce.
Commenting over gold’s freefall, Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong said to Reuters, “Breaking $1,500 is not a good sign for gold. We don’t know what the next support level is going to be.”
“Even though there are some shorts in the market, I think people still want to push the price down. There’s no excuse to push it up, unless there’s a war between North and South Korea”. However Lee added that there is a possibility of rebound as the “market is already oversold”.
Gold prices have now shed about 7% in two sessions.
Echoing Lee’s sentiment, Domenic Parli, a physical dealer at Hong Kong-based Fine Metal Asia said while speaking to Reuters, “I am sure we will see much higher prices after the correction. We broke $1,530 after sell orders on COMEX were triggered.”
The sell-off in gold was triggered on Friday after three back-to-back tepid U.S. economic data pointed towards slowdown on the economy, raising concerns over deflation while reluctance shown by some of the policymakers (Fed’s minutes from latest FOMC) regarding the continuation of the Federal Reserve’s ongoing QE3 also dented the sentiment.
Silver futures plunged 12.35% to $23.08 an ounce.
In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 8.39%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 18.02%.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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