Gold drops more than 2pc to two-week low
London, November 28, 2012
Gold prices fell 2 percent on Wednesday, their biggest one-day drop in three weeks, as the dollar's jump against a basket of currencies and broad-based selling of commodities triggered sell stops, sparking a $20 price drop in less than five minutes.
More than 2 million ounces of Comex gold futures were traded in that time. Selling accelerated as prices fell through the $1,730-1,732 area, traders said, the metal's 10-day moving average and an area of resistance for much of November before prices broke higher on Friday.
Spot gold hit a low of $1,705.64 an ounce and was down 1.8 percent to $1,709.56 an ounce at 1456 GMT. US gold were down 1.9 percent at $1,709.40.
"Clearly if a trader was looking to take profit on his positions then one would finesse metal into the market slowly - so not profit-taking going on here," Sharps Pixley chief executive Ross Norman said.
"More likely this could be a short play, with the seller looking to trigger stops below the market and thus extend the move lower significantly. If so, he certainly caught the market on the hop as the move is counter-intuitive with everything else that is going on in the economy."
Another analyst said the sharp fall suggested computer-driven speculative selling of gold, which hit a six-week high on Friday.
"It seems like we are losing excuses to buy gold," Saxo Bank vice president Ole Hansen said. "The fact that we did not make any progress following the break on Friday could indicate that leverage buyers are still not prepared to engage, or they are closing down shop for the year." - Reuters