Gold futures dropped in Asian trading hours Thursday

Gold futures dropped in Asian trading hours Thursday, as investors bid up the U.S. dollar on concerns about Europe’s debt crisis.

Gold for February delivery declined $12.80 an ounce to $1,574.10 in Asian electronic trading on the Comex division of the New York Mercantile Exchange.

The precious metal extended a steep sell-off made in the New York trading session Wednesday, when it settled down $76.20 an ounce, or 4.6%, to $1,586.90.

That was the lowest settlement for a most-active contract since mid-July and the first time gold had lost its grip on $1,600 since late September.

Gold came under pressure Wednesday after a Federal Reserve policy meeting indicated further major quantitative easing appeared unlikely.

Losses grew as the euro fell below the $1.30 mark for the first time since January after Italian bond yields spiked to a euro-era record, highlighting the funding difficulties that some European governments are facing.

The euro move impacted the gold market, said Jonathan Barratt, managing director at Commodity Broking Services in Sydney, as it resulted in U.S. dollar strength.

The dollar index  traded at 80.537 Thursday, broadly flat from 80.538 in late North American trading after Wednesday’s dollar rally. The dollar index was up 2.4% week-to-date, according to FactSet data.

“If you look at the U.S. dollar and how it represents a safe-haven play, by default all commodities are under pressure,” said Barratt.

“Also gold is one commodity which has held up, so it has had the furthest to fall,” he said.

“We saw an initial break and, when we went through $1,630, we saw larger orders coming into the market. We feel the larger orders are a direct response to people exiting the exchange-traded funds and stop-loss orders going off,” Barratt said.

HSBC analyst James Steel said stress in the financial markets “has not stimulated safe-haven gold buying but has instead weakened the euro and indirectly helped drag gold lower.”

“Until some of the stress in the European financial markets abate, it will be hard to see a strong gold rally,” he added.

Among other metals, benchmark platinum futures  were down $16.40 an ounce at $1,410.20 while March copper futures  edged up 2 cents to $3.30 a pound. – MarketWatch

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Posted by admin on Dec 15 2011. Filed under Gold price. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry