RE: One moreThanks, good paper & logical
Gold falls Thursday as funds cash in
Lewa Pardomuan, Reuters
Published: Thursday, March 20, 2008
SINGAPORE -- Gold dropped more than 2% to its lowest level in a month on Thursday amid a broad-based sell off in commodities and as funds cashed in after pushing the metal to a record above US$1,000 an ounce this week.
Platinum, palladium and silver also fell. New York's COMEX gold futures fell over 3% to hit their lowest in more than four weeks, while Shanghai futures sank by their 5% limit.
Gold tumbled to as low as US$920.30 an ounce, down from US$944.20/945.00 late in New York on Wednesday and off Monday's record high of US$1,030.80 an ounce.
"We have to see whether the funds will continue selling. If they do, of course there is a possibility that it will go down and test US$900," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
A smaller-than-expected U.S. interest rate cut was an excuse for the funds to exit gold and the absence of Japanese speculators also exaggerated movements, said Leung.
Gold tumbled 6% on Wednesday, its biggest one-day%age drop in nearly two years as funds exited commodities, leading to declines in oil, base metals and agricultural products. Trading was thin on Thursday as the Tokyo Commodity Exchange was closed for a national holiday.
"The upshot is we hold our current view that gold prices will fall over the next six months as the U.S. dollar firms and oil prices fall," ANZ senior commodities analyst Mark Pervan said.
"We forecast spot gold to fall to US$850 an ounce by the end of September before firming back towards US$900 an ounce by end of the year as oil prices bottom."
Gold futures for April delivery on the COMEX division of the New York Mercantile Exchange fell US$8.2 an ounce to US$937.1 an ounce, after hitting a low of US$915. The contract struck a record of US$1,033.90 on Monday.
"It is most probably liquidation on margin calls. It looks like players are exiting the market after gold hit the US$1,030 level and there's no reason for physical buyers to buy at high levels," said a dealer in Singapore.
"Retailers are also starting to cash in. That's why I think the market will still fall for another day. It's hard to say where the support level is, but I think it's going to fall below US$900 today," he said.
The dollar firmed against the euro and came near 1-month highs versus the Australian dollar on Thursday, underpinned by sliding gold and oil prices, falling stocks and in spite of investor anxiety over troubled credit markets.
Spot platinum fell to US$1,885/1,890 an ounce from US$1,900/1,910 -- off a record high of US$2,290 hit on March 4.
Silver dropped to US$18.12/18.17 an ounce from US$18.38/18.43 an ounce. Spot palladium fell to US$447/454 an ounce from US$455/460 an ounce.
The most active June contract on the Shanghai Futures Exchange fell by 5% to 214.55 yuan a kilogram, tracking declines in cash gold.
© Reuters 2008
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