NEW YORK (
plummeted Wednesday as traders rejiggered their portfolios ahead of the end of the third quarter.
Gold for December delivery closed down $34.30 at $1,618.10 an ounce at the Comex division of the New York Mercantile Exchange and were accelerating losses in after-hours trading. The
traded as high as $1,672 and as low as $1,617.40 an ounce, while the spot gold price was down $45, according to Kitco's gold index.
sunk $1.40 to close at $30.13 an ounce while the
was up 0.9% at $77.87.
Gold prices became the latest victim of "window dressing" Wednesday. The term is widely used to describe investor positioning at the end of a quarter, where some fund managers are forced to buy good performing assets, like gold, or forced to show profits -- often taking advantage of assets that have had a good rally, like gold. The result is a lack of direction and volatility. Gold prices had been stalling out all morning but then broad selling smacked the commodities sector as the dollar gained strength.
"Metal sentiment has softened overnight on pockets of profit taking," says James Moore, analyst at FastMarkets, but "bargain hunting seems likely to provide ongoing support to the metals in the coming sessions."
The European debt crisis should spur safe haven buyers into gold. European Union nations are voting to expand the European Financial Stability Fund to 440 billion euros, which is now deemed too small. Germany is the key vote to watch on Thursday as there are worries Chancellor Angela Merkel won't be able to wrangle her coalition party to a unanimous vote.
Officials from the European Union, International Monetary Fund, and European Central Bank are headed back to Greece Thursday to further inspect the country's finances. Greece is waiting for its next chunk of bailout money, which it needs before October. The cash has been held hostage by the "troika," as Greece struggled to reduce its budget deficit, although a property tax passed through Parliament Tuesday should help. The downside for gold, however, is if investors feel like Europe is getting a handle on its debt problems. Any decisive action would lessen gold's appeal as a safe haven asset.
Many experts think the uncertainty will cloud the buying environment for gold. "Gold has a good shot to run up to the $1,721-$1,750 areas on this bounce," says David Banister, chief investment strategist at TheMarketTrendForecast.com, "but be careful getting over aggressive just yet in the event of the re-test of the lows or a final dip" to the $1,440 - $1,450 an ounce area.
were getting pummeled Wednesday.
was losing 3.46% to $14.50 while
was down 2.83% at $13.58. Other gold stocks,
were trading lower at $59.38 and $17.09, respectively.
Written by Alix Steel in
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