Gold News

Gold Hits 2013 Crash Low on ETF Sell-Off as Dollar Hits 13-Year High

GOLD BULLION fell through its $1200 floor of the last 9 months Wednesday lunchtime in London, losing 2.4% before steadying just above $1180 per ounce – the bottom of its 2013 price crash – as the biggest jump in 2 years in reported US orders for durable goods saw the Dollar hit fresh 13-year highs on the currency market.
 
European stock markets cut their earlier losses as US equities held just shy of new record highs. Commodities also regained a drop – with crude oil reversing a 1% fall – after the Census Bureau said orders for 'white goods' such as freezers and washing machines jumped 4.8% last month from September, the fastest rise since summer 2014.
 
Sales of new homes fell however to a 4-month low, separate figures showed. Last week's claims for US jobless benefits rose ahead of Wall Street forecasts.
 
All major government bond prices fell meantime, driving 10-year US Treasury yields up to 2.41%, a new 2016 high, as the Euro currency fell to new 2016 lows near $1.05 on the FX market.
 
That curbed the drop in Euro gold prices to a 6-week low, down 1.9% for the day at €1122 per ounce.
 
But priced in Dollars gold fell as low as $1182 per ounce – some $30 down from the start of London bullion trading – just near its 'double bottom' at $1180 of the 2013 crash, when bullion suffered its worst drop in three decades.
 
Chart of the Dollar gold price, last 5 years
Silver fell slightly less, cutting its 2016 gain to 19% at $16.40 per ounce – down from a two-year high above $21 in early July.
 
"Gold has arguably done well to hold on to the $1200 level," said a note from bullion clearing bank ICBC Standard's Tom Kendall earlier – "admittedly by its fingertips."
 
But with all financial markets likely to see lower trading volumes ahead of the US Thanksgiving holiday tomorrow, "If you were inclined to test [that level], the reduced liquidity with US traders absent would be an obvious opportunity. 
 
"It really does depend on the Dollar...and that big figure for gold may be tested before the turkeys are cooked."
 
"Momentum and [moving average] indicators are bearish," said Tuesday night's technical analysis from fellow London bullion bank Scotia, "and risk remains to the downside."
 
Tuesday saw the 9th successive outflow of bullion needed to back the SPDR Gold Trust (NYSEArca:GLD), the longest such stretch since gold's 25% price plunge of April to June 2013.

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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