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Gold Prices Plummet Below $1,600 Amid Concerns Over Liquidity

Strategic Insights

— 1 min read

Concerns over liquidity overshadowed any interest in buying gold at lower prices, causing the price of gold to plummet below $1,600. Despite a brief resurgence in the afternoon, gold ended the day at a four-week low, while silver futures posted mild losses. Platinum and palladium also suffered significant losses, with platinum declining 4.1% and palladium falling 2.4%. Investors, fearing a Greek default and its potential to trigger a global credit market event, were cautious and opted to sell off precious metals holdings to shore up ample cash.

Key Takeaways:

  • The price of gold plummeted 2.7% to settle at $1,594.80 a troy ounce on the Comex, its lowest point since mid-July.
  • Concerns over liquidity were the dominant theme among investors, with traders hoping for upbeat news from European lawmakers but instead selling off precious metals holdings to shore up ample cash.
  • Platinum was the biggest loser on the day, with the most active contract, for October delivery, settling down 4.1% at $1,546.90 a troy ounce on the Nymex.
  • Silver futures posted mild losses, but have dropped 23% from last week.
  • Gold held by exchange-traded funds has been steady throughout last week's market rout, with the world's largest ETF, SPDR Gold Trust (GLD), holding firm at 1,252.21 metric tons.
  • Market watchers point out that silver's extreme volatility proves it is much riskier than gold and doesn't share the safe harbor benefits of its more expensive cousin.

Statistics:

  • Gold price dropped 2.7% to settle at $1,594.80 a troy ounce on the Comex.
  • Silver futures settled 1.25 cents, or 0.4%, lower at $29.976 a troy ounce on the Comex.
  • Platinum declined 4.1% to settle at $1,546.90 a troy ounce on the Nymex.
  • Palladium fell 2.4% to settle at $627.40 a troy ounce on the Nymex.
  • Gold ETFs held by the SPDR Gold Trust (GLD) remained steady at 1,252.21 metric tons.

Sources:

  • Dow Jones Commodities News via Comtex, 9/26/2011
  • (Quotes and statistics are exact as stated in the source material)
  • Tatyana Shumsky, Dow Jones Newswires; tatyana.shumsky@dowjones.com
  • Dow Jones & Company, Inc.

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