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Gold Prices Plunge More Than 3% as Demand for Safe-Haven Bets Disappear; Silver Prices Also Fall Sharply

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Gold Prices plunged more than 3% on Tuesday to break below $1,300 an ounce mark as the partial government shutdown, which started from Monday, failed to spark off any sort of panic in the market with investors anticipating that lawmakers would reach a deal over the spending-limit sooner than later. Silver prices also fell sharply in trading on Tuesday.

At last check, gold futures for December delivery fell 3.10% to $1,285.90 an ounce while spot gold lost 2.96% to $1,287.60 an ounce.

SPDR Gold Trust (ETF) (NYSE: GLD) was last down 2.96% to $124.37.

Bullion, which clocked its best quarterly performance for the period stretching from July to September by gaining 8%, is now down about 22% since the beginning of the year.

A very robust manufacturing data release on Tuesday further weighed on the sentiment. The Institute of Supply Management (ISM) said that manufacturing activities expanded as its fastest pace since last 30 months in September.

The data has rekindled speculation that the Federal Reserve, which is scheduled to hold its next open market committee meeting (FOMC) on Oct. 28-29, might start reducing pace of the bond purchase program.

“We think there’s no proper incentive for investors to buy a lot of gold. In the end, if the investment buying is weak there is very little potential for gold to increase,” said Tobias Merath, head of commodities and research investment at Credit Suisse, according to Reuters.

Analysts, according to Reuters, fear that bullion now might enter a bearish territory after having break below the physiological $1,300 mark.

Silver futures tumbled 3.22% to $21.01 an ounce.

In late trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 2.63% to $20.34, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 5.44% to $18.96.








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edliston
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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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.

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