Gold and Silver Prices Crash
Gold prices were hammered while the U.S. dollar rose sharply against all major traded currencies during Asian trading hours on Thursday after the Federal Reserve Chairman Ben Bernanke indicated at tapering of the multi-billion dollar asset purchase program, before the end of this year. Silver prices also tumbled in early trading on Thursday.
At last check, U.S. gold futures for August delivery tumbled 6.18% to $1,289.10 an ounce while spot gold plunged 3.89% to $1,289.10 an ounce.
Earlier on Wednesday, the Federal Reserve concluded its two-day policy rate meeting. As expected Bernanke left interest rate at record low level but said that the bond purchase program will be scaled down towards the end of the year, adding that the bank saw the U.S. economy improving. The Chairman added that the bond purchase program will be winded down in a phased manner until the first half of the next year.
Following the announcement U.S. stocks fell across-the-board on Wednesday while yields on treasuries soared.
Asian equities, European equities, as well as commodities also fell sharply on tumultuous Thursday.
Rampant currency printing from global central banks was the main reason why the bullion had bull runs until 2012. With the Federal Reserve beginning to end an era of easy money, investors are now cutting their positions on inflation-hedge bets.
The physical side demand in Asia is also cooling off. While India has raised import tariffs on gold, China’s consumption is also falling amid slowing economy.
In a note to clients, Mark Keenan, cross-commodity research strategist at Societe Generale in Singapore said, “With the negative sentiment that we have in gold currently, we really do need to see a significant amount of physical buying in order to stabilize the market – which we are not seeing,” according to Reuters.
Silver futures nosedived 8.55% to $19.77 an ounce.
In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 5.39%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 11%.
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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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