Gold Down Sharply
June 26th, 2007WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Gold is down sharply, trading around a five month low. From a technical perspective, closes under $650 are ominous for gold bulls… Unless you’re a gold bull who’s just happy to be able to buy more at a lower price. (Like me, and the Great Mogambo.)
If you can’t or don’t want to personally hold your own gold, consider BullionVault for your professional gold vaulting needs. Several Cryptogon readers use BullionVault. I do too.
Via: Market Watch:
Gold futures dropped more than $9 an ounce Tuesday to close at their lowest level since mid-January, and silver futures sank to their weakest level in eight months, pressured by the options expiration on the July contracts and weaker oil prices as traders awaited a Federal Reserve decision on interest rates due later this week.
“This erosion was in the making for some time now [certainly since the scary June 8 drop],” said Jon Nadler, an analyst at Kitco Bullion Dealers. “People ignored the subtext of risk aversion becoming trendy — and now they are suffering the consequences.”
“Technicals have converged with short-term fundamentals to yield a pivotal tone change in the market,” he said in e-mailed comments.
Gold for August delivery closed 1.4%, or $9.40, lower at $645.30 an ounce on the New York Mercantile Exchange after tapping a low of $642.80. It is trading at the contract’s weakest intraday level since Jan. 16. On Monday, the contract shed $2.30 to close at $654.70.
Silver futures followed suit, with its July contract dropping to a low of $12.15 an ounce, its weakest intraday level since Oct. 25, 2006. It closed down 4.6%, or 59.7 cents, at $12.28.
“Expectations of a more hawkish stance on interest rates by the world’s central banks looks set to keep gold on a back footing in the coming sessions,” said James Moore, analyst at TheBullionDesk.com, in a research report.
The expiration of options on the July gold and silver contracts in New York Tuesday was also likely contributing to the liquidation in the metals, according to Mark O’Byrne, director at Gold & Silver Investments Ltd.
Gold has been steadily falling in NZD due to the strength of our currency. Check out how it’s diverged in the last few months:
http://img296.imageshack.us/img296/9625/goldnzdusddn6.png
(home-made graph using point-in-time prices, not end-of-day)
A good time to buy physical metals at a bargain price, like the Mogambo says. However also a good warning about the risk of leverage. If you bought silver futures with 10% down, a 5% drop in the price wipes out half your account equity in a single day!