NY Precious Metals Review: Gold hits 4-yr low
By Ross Allen, Bridge News
New York--Jly 2--COMEX Aug gold settled down $2.80 at $332.30 per ounce after setting a 4-yr low in a technically weak market that is increasingly drawing in new short-side speculators. Producer selling in the Asian physical markets sparked the selloff, continuing a month of erosive losses. Other precious metals also ended lower. * * *
Gold's 20-cent loss Tuesday on COMEX was cited as the reason behind the Asian selloff, which undercut Access trade overnight and lead to a fresh contract low; however, the metal recovered slightly during open-outcry, trading to a high of $334.90 in early trade.
Gold resumed its downside push in late trade, with Aug setting a 4-year active contract low and a fresh contract low at $332.10 per oz.
The metal broke weak support at $334.60 on the Asian selloff. This $334.60 support line was weak and traders looked to $332.00 as next support, with psychological support at $330.00 per oz.
However, contangos for forward-selling are still wide enough to bring in producers, even at the current, historically low prices, one trader said. The prospect of a continued selloff for gold means mining houses are forward-selling as a way to sell the metal for more than the cost of production.
At current levels, many producers, especially in South Africa, find costs are higher than the gold price--only through forward-selling are they able to make a profit. In Asian trade overnight, an Australian producer sold-forward 200,000 oz, one trader said. The deal pushed lease rates higher and sent the nearby price lower.
Adding to gold's problems in the final 15 minutes of the session was the Federal Reserve's Federal Open Market Committee's decision to leave interest rates unchanged. The decision, which went along with analyst forecasts, caused the bond and stock markets to surge, taking money from the gold and silver markets.
Sep silver, which settled down 3.3c at $4.645 per oz, has been stronger technically than gold and has maintained strength in spite of gold's selloff. However, the metal finished weakly, pressured by the FOMC decision and the underlying weakness in gold.
Platinum and palladium were both lower as well, with Oct platinum settling down $3.70 at $417.20 per oz and Sep palladium down $1.80 at $174.00 per oz on anticipation of the resumption of shipments from Russia. These exports, which have been halted since December, were expected in June but have been pushed back until at least next week.
SETTLEMENT PRICES
Aug gold (GCQ7) at $332.30, dn $2.80; RANGE: 335.50-332.10
Sep silver (SIU7) at $4.645, dn 3.3c; RANGE: 4.700-4.640
Oct platinum (PLV7) at $406.70, dn $5.20; RANGE: 415.00-403.00
Sep palladium (PAU7) at $174.50, dn $1.80; RANGE: 176.00-173.00
SPOT PRECIOUS METALS PRICES: Late New York London Late Tokyo Gold (KRCGL)
331.00-331.60 331.50-332.00 332.40-332.90 Silver (KRCSL) 4.62-4.64 4.64-4.66 4.64-4.66
Platinum (KRCPL) 406.00-407.00 423.00-427.00 428.00-431.00 Palladium (KRCPA)
189.00-193.00 189.00-194.00 193.00-198.00
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