Spot gold prices dropped to a 3-month low at the close of London trade on Friday, dropping through $650 per ounce for the first time since mid-March.
Down more than $20 from Thursday's London close, this fresh drop in gold versus the Dollar repeated the previous day's pattern when Wall Street was left to sell gold lower in the face of rising US government bond yields.
"There were a lot of sell stops," says George Gero, a vice president with RBC Capital Markets, citing $670.
"A lot of it has to do with people just wanting out, because the higher market in Treasury yields is just frightening everyone.
"They are concerned that higher rates are going to make it much more expensive to hold the metal." (How come? Get the facts about what moves the gold market here...)
Friday saw the yield on 10-year US Treasury bonds climb as high as 5.24% – a level last reached a year ago.
Spooked at the thought that bond market vigilantes might finally be returning to push interest rates higher, Wall Street and the City continued to sell fixed-income assets lower, even as US stocks staged a modest rebound.
In Frankfurt the 10-year Bund yield hit 4.6% – a level last seen in late 2002
Ten-year gilt yields in London rose to a nine-year
high above 5.4%.
In Tokyo overnight the Nikkei 225 index had closed 1.5% down. Real estate stocks suffered the most, dropping 4.1% on average.
Tocom gold futures for delivery in April ‘08 played catch up with Thursday's drop in the spot market, losing 1.7% to the equivalent of $668 per ounce.
“The fall in the gold price last night was pretty sharp,” said David Moore at Commonwealth Bank of Australia earlier to Bloomberg.
“[It was] an exceptionally heavy sell-off...The lower price has attracted a little bit of buying this morning.”
Along with US stocks, silver prices also fell faster than gold, dropping 2.7% for the week.
World currencies also suffered as Dollar yields rose. (Read more about the “race to debase” amongst the major government monies here...)
The Pound fell versus the Euro – and the Euro fell versus the Dollar yet again, dropping more than one cent to $1.3420.
Gold priced in Sterling dipped below its floor of £330 per ounce even as the Pound itself dropped 3 cents against the Dollar to $1.9650.
For Eurozone investors wanting to buy gold today, the drop went as low as €485 per ounce – a fresh 3-month low.
Gold investors wishing to take advantage of this pullback – by buying physical gold bullion before the long-term bull market in gold reasserts itself – will find the tightest prices and lowest fees at www.BullionVault.com today.