Gold prices were tumbling Monday in New York as funds dumped positions and the greenback rallied.
Benchmark bullion futures were shedding $18.40 at $885.30 an ounce in recent action on the Comex division of the New York Mercantile Exchange.
The drop in gold came amid strength in the U.S. currency. One euro was buying $1.5498, down from $1.5621 Friday. The British pound was selling for $1.9604 vs. $1.9765 in the last session. The dollar was trading for 107.8 Japanese yen, up from 107.1 yen previously.
Early this morning, a couple of large funds "unloaded sizable positions," according to Jon Nadler, a gold analyst at Montreal-based bullion dealer Kitco. "I think there is a realization that the
Federal Reserve is done easing and that's what brought the price of gold up in the first place," he says.
unlikely to continue cutting short-term interest rates, the dollar will be supported. In turn that could make a price rally hard for dollar-denominated assets such as gold. The Federal Open Market Committee issues its policy statement Wednesday, which should give some insight into the central bank's current stance on inflation and the dollar.
In addition, Nadler says the price charts have started to look unfavorable. "Two times the price has recently failed to overcome resistance above $900, so it is not surprising that we have pulled back," he says.
CurrencyShares Euro Trust
was falling 0.9%. The
CurrencyShares British Pound Sterling
was losing 0.6%. The
CurrencyShares Japanese Yen Trust
was shedding 0.9%.
SPDR Gold Trust
, which holds solid gold bars, was sliding 2.2%.
In the precious metals patch
Harmony Gold Mining
was losing 3.8%, weighed down by the falling gold price.