Gold for June delivery at the COMEX division of the CME was falling $12.30 to $1,408.90 an ounce. The gold price traded as high as $1,432.80 and as low as $1,404, while the spot price was shedding $14.10, according to Kitco's gold index.
"Option expiration on Comex this Thursday injects early book squaring-options if in the money become futures contracts on Friday," George Gero, precious metals strategist at RBC Capital Markets, wrote in a note.
David Williams, director at Strategic Gold Corp., said Tuesday was merely a pullback among traders still searching for a solid technical range following the massive collapse on April 15. He said the slight selloff Tuesday morning could be due to book-squaring for option expiration, but said the April 12 and April 15 free fall in gold prices likely wiped out most of those options already.Silver prices for May delivery were sliding 47 cents to $22.85 an ounce, while the U.S. dollar index was growing 0.35% to $82.94. Goldman Sachs issued a note on Tuesday that said the bank closed its short trading recommendation on gold. Goldman announced two weeks ago a recommendation to short COMEX gold, which was followed a couple sessions later by a more than $200 drop in prices across two days. Goldman said on Tuesday that it exited the short trade "significantly" below its original price target of $1,450 an ounce, for a gain of 10.4%. "Our bias is to expect further declines in gold prices on the combination of continued ETF outflows as conviction in holding gold continues to wane as well as our economists' forecast for a reacceleration in US growth later this year," Goldman's commodities research note said. Gold mining stocks were mostly lower. Shares of Newmont Mining (NEM) were off 3.6%, and shares of Eldorado Gold (EGO) were down 3.4%. Among volume leaders, Barrick Gold (ABX) was losing 1.2%. Gold ETF SPDR Gold Trust (GLD) was sliding 0.96%, while iShares Gold Trust (IAU) was down 0.94%. -- Written by Joe Deaux in New York. >Contact by Email. Follow @JoeDeaux
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