Twenty-eight years to the day since Gold Prices reached their long-term top of $850 per ounce, the Gold Market slipped 1.8% against the US Dollar on Monday as global stock markets collapsed by 5% and more.
By the close in London, the FTSE100 index of blue-chip British stocks stood more than 323 points lower after its worst session since Sept. 11th, 2001.
The Cac40 in Paris dropped 6.8% of its value. The Dax in Frankfurt lost 7.1%. The Sensex in Mumbai, India, had earlier finished the day more than 9% down, while the Australian ASX fell for the 11th session running.
"I've never seen fear like this," said one City broker to the Financial Times.
US investors holding only domestic stock remained sheltered from today's sharp plunge, thanks to Wall Street staying closed for Martin Luther King Day. But spread-betting prices quoted in London put the Dow more than 600 points down at an 18-month low.
"A gloomy concoction of poor economic and corporate news plus a growing acceptance that the sub-prime fall-out has much further to go has created the highly distressed conditions for a global sell-off in equities," added Martin Slaney, an analyst at GFT Global Markets.
"The latest rumor is that the Bank of China may write off as much as $1 billion in sub-prime related losses have added to the negativity."
Today's rout came as both the US Dollar and the Japanese Yen rose rapidly on the foreign exchange market. The high-yielding New Zealand Dollar – former darling of "carry trade" speculators, who borrowed cheap Yen at just 0.5% per year to re-invest elsewhere for easy gains – lost 3% against the Japanese currency.
By the end of business in Europe, the Euro stood more than 1.5¢ lower against the Dollar, trading down at a one-month low beneath $1.4440.
The British Pound sank to a nine-month low beneath $1.9450, and that helped the Gold Price in Sterling hold above £445 per ounce throughout the session.
Gold also lost just 0.5% for French, German and Italian investors, too.
"It was an unpleasant day for the Euro against the Dollar and the Yen," says Tom Kendall, an analyst at Mitsubishi, "and that filtered through into Gold Prices.
"We've swung from being wildly bearish on the Dollar and now the focus has shifted to the Euro."
Gold Prices recorded a PM Fix of $871.25 per ounce on Monday afternoon in London, their lowest fix against the US currency since Jan. 7th.
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