Gold Futures Plummet on Fund Liquidation and Market Volatility

Strategic Insights -

Gold futures experienced a sharp decline on January 12, 2009, settling at their lowest point in nearly a month. The February gold contract fell by $34, or nearly 4%, to settle at $821 an ounce on the Comex division of the New York Mercantile Exchange. This decline was attributed to fund liquidation, a rising U.S. dollar, and technical selling, which put pressure on the metal. Analysts pointed out that gold had become overbought in the face of rebalancing asset allocations and the tug-of-war between inflation and recession.

Key Takeaways:

  • Gold futures fell sharply on January 12, 2009, reaching their lowest point in nearly a month.
  • The February gold contract declined by $34, or nearly 4%, to settle at $821 an ounce.
  • Fund liquidation, a rising U.S. dollar, and technical selling were identified as key factors contributing to the decline.
  • Analysts predicted further selling by banks to raise capital and the expectation of continued pressure on longs.
  • Silver futures also declined, with the Comex March silver contract falling 57 cents, or more than 5%, to settle at $10.75 an ounce.
  • Platinum and palladium futures declined due to slack appetite for the metals, with Nymex April platinum falling $31.60, or more than 3.1%, to settle at $973.90 an ounce.
  • Analysts noted that gold's immunity to market volatility was coming to an end, with the metal succumbing to overall price declines and a rising U.S. dollar.

Statistics:

  • Gold futures fell by $34, or nearly 4%, to settle at $821 an ounce.
  • February gold contract fell to an $817.10 low during pit hours.
  • After-hours electronic trading saw gold priced at $815.40, extending its low since December 12, 2008.
  • Comex March silver fell 57 cents, or more than 5%, to settle at $10.75 an ounce.
  • Nymex April platinum fell $31.60, or more than 3.1%, to settle at $973.90 an ounce.
  • March palladium on the exchange declined $4.75, or more than 2.4%, to settle at $187.15 an ounce.

Sources:

  • "New York, Jan 12, 2009 (Dow Jones Commodities News via Comtex) --"
  • [Matt Whittaker, Dow Jones Newswires; 201-938-5959; matt.whittaker@dowjones.com]