Gold Futures Sinks Amid Weaker Equities and Crude Oil Decline

Strategic Insights -

Gold futures tumbled Monday as investor sentiment shifted due to weaker equities and a decline in crude oil prices, but recovered some losses as the US dollar weakened. The metal's price settled at $953.50 an ounce, down $5.30 from the previous day's close. Market analysts attributed the decline to a combination of factors, including declining equities, which can bring a "chill" of economic concern to the market, and the sharp drop in China's leading stock index, which triggered a global sell-off in commodities. Meanwhile, silver futures gained as participants bought the metal, speculating it would move up in price relationally with gold.

Key Takeaways:

  • Gold futures sank $5.30 to settle at $953.50 an ounce on the Comex division of the New York Mercantile Exchange, as weaker equities and crude oil decline dampened inflation expectations.
  • Sterling Smith, market analyst at Country Hedging, noted that declining equities can bring a "chill" of economic concern to the market, which kills the inflation bug.
  • The slightly weaker dollar inspired some "minor" short covering, or the buying back of previously sold positions, Smith added.
  • Michael Gross, broker and futures analyst with OptionSellers.com, attributed the decline in gold to long liquidation, or the selling of positions that had been bought in anticipation of rising prices.
  • Silver futures gained 10.8 cents to settle at $14.923 an ounce, as participants bought the metal, speculating it would move up in price relationally with gold.
  • Andrew Montano, director of precious metals at Scotia Mocatta, noted that lower oil prices weighed on the metal, with crude futures falling below $70 a barrel.
  • Ralph Preston, senior market analyst with Heritage West Financial, mentioned that traders will be positioning themselves in front of Friday's non-farm payrolls data, which is expected to have a significant impact on the market.

Statistics:

  • Gold futures declined by $5.30 to settle at $953.50 an ounce.
  • December gold was down 0.56% from the previous day's close.
  • Silver futures gained 10.8 cents to settle at $14.923 an ounce.
  • Crude futures fell below $70 a barrel.
  • The Dow Jones Industrial Average was down 93.49 points.
  • The ICE Futures U.S. dollar index was down 0.154 point.

Sources:

  • Dow Jones Commodities News via Comtex
  • Dow Jones Newswires
  • Dow Jones & Company, Inc.