Gold hits 2-month low below $880 on metals sell-off

Gold hits 2-month low below $880 on metals sell-off

April 1, 2008

Gold prices tumbled to a two-month low below $880 an ounce on Tuesday as a dollar rise and de-leveraging amid a U.S. stock rally triggered a heavy sell-off in all precious metals.

Gold ..> hit a low of $872.90 and was at $884.20/885.4 an ounce at 2:15 p.m. EDT, against $916.20/917.00 late in New York on Monday, when it had fallen 2 percent.

The yellow metal has fallen about 15 percent since hitting a record high of $1,030.80 two weeks ago.

“Given the elevated level of speculative interest, we would not rule out a deepening of the current correction in prices,” said Suki Cooper, precious metals analyst at Barclays Capital.

“However, the overall environment for gold remains positive over the forthcoming months,” she said, adding the dollar was not expected to rise markedly against the euro in the short term, given the likelihood of poor U.S. economic data this week.

Jonathan Jossen, an independent floor trader in New York, said that gold was pummeled as funds were leaving all commodities in droves.

“We watched heavy fund selling in the futures all day yesterday. Nobody looked and said ’OK, here is the bottom and let’s get back into the gold market,’” Jossen said.

Jossen also cited a negative gold lease rate last week, which signaled possible central bank selling.

Read Full Article Here

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