Gold Futures Decline Sharply Amid Profit-Taking and Strengthening Dollar

Strategic Insights -

Gold futures tumbled $24.70 to settle at $918 an ounce on the Comex division of the New York Mercantile Exchange, as profit-taking and a stronger dollar put pressure on the metal. The rally in equities also accelerated the losses in gold, as investors pulled money back into stocks that had been viewed as a safe haven. Analysts attributed the selling in gold to safe-haven liquidation, as investors rebalanced their portfolios ahead of a potential downturn in the stock market.

Key Takeaways:

  • Gold futures declined sharply by $24.70 to settle at $918 an ounce on the Comex division of the New York Mercantile Exchange.
  • Profit-taking and a strengthening dollar were cited as primary reasons for the decline.
  • A rally in equities accelerated the losses in gold, as investors pulled money back into stocks that had been viewed as a safe haven.
  • Analysts attributed the selling in gold to safe-haven liquidation, as investors rebalanced their portfolios ahead of a potential downturn in the stock market.
  • George Gero, vice president with RBC Capital Markets Global Futures, said that the market "kept getting more pressure from funds impatient with (gold's) inability to reach $1,000 or rally with crude."
  • Michael Gross, broker and futures analyst with OptionSellers.com, said that the decline in gold was a result of profit-taking and a hangover from the rally the previous week.
  • Sterling Smith, vice president with FuturesOne, noted that a stronger dollar pressured the metal, and that the selling in gold was safe-haven liquidation.
  • Andrew Montano, director of precious metals at Scotia Mocatta, also attributed the decline in gold to safe-haven liquidation.

Statistics:

  • April gold fell $24.70 to settle at $918 an ounce.
  • Comex May silver fell 39.3 cents to settle at $12.94 an ounce.
  • Nymex April platinum fell $15 to settle at $1,063.70.
  • June palladium on the exchange lost $4.90 to settle at $199.10 an ounce.
  • The ICE Futures U.S. dollar index was up 0.505 point at 89.017 shortly after gold closed.

Sources:

  • Dow Jones Commodities News via Comtex.
  • RBC Capital Markets Global Futures, attributed to George Gero.
  • OptionSellers.com, attributed to Michael Gross.
  • FuturesOne, attributed to Sterling Smith.
  • Scotia Mocatta, attributed to Andrew Montano.
  • Dow Jones Newswires, March 9, 2009.