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Gold Prices Settle at Almost Three Year Low Level; Silver Prices Tumble

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Gold prices settled at almost three-year low level on Wednesday due to broadly higher U.S. dollar and technical sell-off, which was triggered after the metal fell below its key support level. Silver prices, meanwhile, also tumbled in trading on Wednesday.

U.S. gold futures for August delivery tumbled more than 3% or $45.30 an ounce to settle at $1,229.80, while spot gold was last down 3.66% to $1,230 an ounce.

Bullion, which was under pressure ever since the Federal Reserve Chairman Ben Bernanke signaled that the bank, could possibly start winding down its $85 billion worth monthly bond purchase program by the year-end, fell sharply on Wednesday after the metal fell below its key support level of $1,270, triggering technical sell-off.

Rising U.S. dollar and rally in equity markets is also weighing on gold prices.

Widening spreads between treasuries and German bunds and  improving U.S. macroeconomic environment are boosting the U.S. dollar, making dollar priced commodities more expensive for dealers holdings other currencies.

“If you look at yields, they are going higher, and people are more bullish on the dollar – all of this creates a difficult environment for gold,” said UBS analyst Joni Teves, according to Reuters.

Holdings of the SPDR Gold Trust (ETF) (NYSE: GLD), the world’s largest gold-backed ETF, reported that the fund witnessed biggest one day outflow in more than two months on Tuesday. The fund’s holdings fell 16.23 tons on Tuesday while year-to-date; holdings have dropped by 381 tons, showed a data provided by Reuters.

Silver futures were last down 4.38% to $18.67 an ounce.

In late trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 5.34%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 10.08%.

 

 

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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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