Gold Prices Below $1,400 an Ounce, Silver Prices Plunge
Gold prices were hammered on Monday slumping more than 9% as rattled investors continued panic selling after the metal entered in the bear territory on Friday. Silver prices plunged more than 11% on Monday.
In last two sessions, gold prices have slumped about 13%, which is biggest-two day drop in last 30 years, according to a data provided by Reuters.
At last check, U.S. gold futures for June delivery were tumbling 9.08% to $1365.0 an ounce. Silver futures were plunging 11.15% to $23.39 an ounce.
Gold prices have come under tremendous sell-off pressure since last week when Cyprus, in order to fund part of its bailout requirements, said that it will be selling its bullion reserves, stoking concerns that other nations facing debt problems could follow the suit.
Besides, the Federal Reserve’s minutes from its latest FOMC (held Feb 18 19), released last week, also triggered concerns over the longevity of the ongoing $85 billion worth monthly bond purchase program. The minutes showed that some policymakers were in favor of ending the quantitative easing by the year-end.
Adding to gold’s woes were dismal economic data releases from China and the U.S. While Chinese GDP grew 7.7% in the first quarter of 2013 compared to economists’ expectations of 8.0% growth, manufacturing activities in the New York State fell sharply in April, showed the New York Fed’s State Empire State Index.
Still, many market strategists believe that gold could rebound since it’s already lying in the oversold territory.
“You can’t stand in front of a steam train — the market has to run itself out and then I think you will see some meaningful correction towards the $1,510-$1,525 level,” said Gerhard Max Schubert, head of commodities at Emirates NBD bank in Dubai, according to Reuters.
Meanwhile, holdings in SPDR Gold Trust (ETF) (NYSE: GLD), world’s largest gold-backed ETF continued to dwindle. On Friday, the fund saw an outflow of 22 tons.
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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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