This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Gold Prices Pop After Historic Tumble (Update 2)

Updated from 11:40 a.m. EDT with closing prices and a comment

NEW YORK ( TheStreet) -- Gold prices popped Tuesday as buyers returned to the market a day after the yellow metal saw its largest percentage drop since 1983. Gold plummeted 9.3% on Monday.

Gold for June delivery at the COMEX division of the CME jumped $26.30 to settle at $1,387.40 an ounce. The gold price traded as high as $1,404.20 and as low as $1,321.50 an ounce, while the spot price was gaining $13.80, according to Kitco's gold index.

"Temporarily I would say we have found a bottom," Tom Vitiello, partner at Aurum Options Strategies, said in an interview. "The option volatility has come in . . . and that's a big thing because that's telling us that people have a little bit less fear of the market continuing the decline."

Spot gold sank more than 9% on Monday, marking the largest percentage drop since Feb. 28, 1983, when the yellow metal shed 12.1%, according to Bloomberg data.

Investors and traders saw gold tumble $203.80, or 13%, over its past two sessions as liquidation pressure and long-only funds sold off huge positions in the yellow metal.

"I think it was more of a case where you had a few different events or happenings that all combined into enough pressure that triggered a whole bunch of technical selling, and a whole bunch of players that probably had been in the market more from a momentum standpoint got stopped out," said Anthem Blanchard, CEO of Anthem Vault.

Multiple analysts and brokers on Monday said in interviews they weren't sure where new technical support would build for gold, and many said the sharp downward momentum may not be finished for the week.

"I don't think you should be a buyer of gold here," said Tyler Bollhorn, founder of

Bollhorn said the price dive across Friday and Monday wiped out the weak long holders of gold.

"Average retail mom and pop [were] buying gold because the gold bugs told them it was the right thing to do and you had some reports coming out saying gold was going to $2,000 [an ounce], and those were weak holders," said Bollhorn. "They weren't holding it for any other reason than they thought it was going higher."

Gold was showing a glimmer of new strength on Tuesday morning, despite U.S. economic data that suggested inflation may be easing. Investors often view the precious metal as a hedge against inflation -- the Federal Reserve's massive quantitative easing programs since the financial crisis have driven up speculation that the monetary stimulus could cause inflation. To this point, high inflation hasn't been an issue.

The Consumer Price Index fell 0.2% in March, which followed February's 0.7% increase. Economists polled by Thomson Reuters were expecting the index to remain unchanged.

Silver prices for May delivery added 27 cents to close at $23.63 an ounce, while the U.S. dollar index was dropping 0.64% to $81.79.

Gold ETF SPDR Gold Trust (GLD) was climbing 0.5% to $131.97. The massive gold ETF droppped more than 8.5% on Monday, and has plummeted 18.9% in the past three months.

Uncertainties in Europe due to Cyprus' recent financial struggle and weakening economic data from China have battered gold ETF trading.

"Recent price volatility has been solely driven by ETF paper speculators fleeing the market in a panic herding to other investments in search of better returns," Louis Palafoutas, CEO of MorganGold, said in an email.

iShares Gold Trust (IAU) was gaining 0.49% to $13.26.

Gold mining stocks were mixed on Tuesday. Shares of Randgold Resources (GOLD) were adding 1.1%, while shares of Barrick Gold (ABX) were falling 5%.

-- Written by Joe Deaux in New York.

>Contact by Email.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
IAU $12.23 1.70%
SGOL $123.63 1.90%
GLD $121.11 1.70%
AAPL $95.03 -2.90%
FB $117.40 7.80%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs