Gold Prices fall to More Than 2-½ Year Low Level; Silver Prices Also Tumble
Gold prices plunged on Thursday as edgy investors made an exodus from broader asset classes and sought safety in treasuries and the U.S. dollar after the Federal Reserve signaled at possible tapering of its multi-billion dollar asset purchase program. Silver prices also tumbled in trading on Thursday.
Gold futures for August delivery plunged more than 6% or $87.80 an ounce to settle at $1,286.20 while spot gold was last down 4% to $1,294 an ounce. Gold Prices are now at more than two and half years low level having touched historic high of $1,921 an ounce in September 2011. In late trading, the SPDR Gold Trust (ETF) (NYSE: GLD) was down 4.94% to $124.14.
Silver futures were last down 8.75% to $19.73 an ounce.
The Federal Reserve said on Wednesday that it could probably start winding down of its bond purchase program by the end of this year, in a phased manner; and could completely halt it by the second half of the next year, provided economic indicators continued to show signs of improvement.
Bullion losses intensified on Thursday after the metal fell below its key support level of $1,321 an ounce, triggering technical sell-off.
Meanwhile UBS Bank cut its one-month target price of gold to $1,250 from its earlier projection of $1,425 an ounce while three-month price forecast was slashed to $1,350 from $1,500, citing Fed’s hawkish stance.
In a note to clients, UBS said, “Slowing Fed asset purchases, with the end now potentially in sight, higher yields, a stronger dollar and continued improvements in the economy are significant obstacles that perpetuate an already very weak investor sentiment.”
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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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