12/15/2011 01:16:00 AM
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Why Gold dropped
Gold steadied on Wednesday, after having neared two-month lows the day before in its largest monthly slide since September, prompted by the dollar's rise against the euro to 11-month highs as the European debt crisis roars on. Spot gold was last quoted unchanged on the day at $1,630.89 an ounce by 1111 GMT, set for a 4.2 percent fall this week, its largest weekly slide in nearly three months. Gold has lost about 8.0 percent in value so far this month, on course for its weakest December performance since 2008 and its third-largest monthly sell-off in three years, the point at which the global credit crunch was at its worst.
Gold dropped below $1,600 a troy ounce as the euro's slide below $1.30 renewed fears of a liquidity crunch in Europe, prompting a shift to cash. Gold traders took their cues from the euro, which slumped below a psychological threshhold for the first time in 11 months, stoking worries that Europe's economy and financial system are in far worse shape than previously thought. Gold for February delivery was recently down $73.20, or 4.4%, at $1,589.90 a troy ounce on the Comex division of the New York Mercantile Exchange, the first time the most-active contract has traded below $1,600 since Oct. 5. Gold's declines accelerated after prices slid below the 200-day moving average, which triggered automatic selling for some investors.
Why Silver dropperd
Silver prices tumbled 6% and gold retreated Wednesday as investors rushed to cash in their holdings amid continued disappointment that the Federal Reserve refrained from a third fiscal stimulus and worries about a weaker euro. A sharply weaker euro, which broke below the $1.30 for the first time since January, added to negative pressure on precious metals prices. Gold and silver are both priced in dollars and their allure is dulled by a stronger greenback, which makes these assets seem more expensive to buyers who use other currencies.
Europe's ongoing sovereign debt crisis continues to be a downbeat influence on precious metals prices as worries about a cash crunch eclipse investors' desire for a store of value asset. From August through December U.S. Silver drilled 21,433 feet of core in 46 diamond drill holes underground at the Coeur and Galena mines. Shares Silver ETF (SLV) was falling some 5% as the dollar rose to 11-month highs against the euro.
MCX Market Data
Date | Time | Currency | Economic Data | Forecast | Previous |
THU 15TH DEC | 7:00pm | USD | PPI m/m | 0.3% | - 0.3% |
| 7:00pm | USD | Unemployment Claims | 389K | 381K | |
| 7:00pm | USD | Core PPI m/m | 0.2% | 0.0% | |
| 7:00pm | USD | Current Account | -108B | -118B | |
| 7:00pm | USD | Empire State Manufacturing Index | 3.1 | 0.6 | |
| 7:30pm | USD | TIC Long-Term Purchases | 53.4B | 68.6B | |
| 7:45pm | USD | Capacity Utilization Rate | 77.9% | 77.8% | |
| 7:45pm | USD | Industrial Production m/m | 0.3% | 0.7% | |
| 8:30pm | USD | Philly Fed Manufacturing Index | 5.1 | 3.6 | |
| 9:00pm | USD | Natural Gas Storage | -89B | -20B |
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