October 4, 2016 / 1:41 PM / 10 months ago

PRECIOUS-Gold slides 3 percent to lowest since Brexit vote

3 Min Read

(Rewrites throughout, updates prices; adds comment, second
byline, NEW YORK dateline)
    * Gold slides to lowest since mid June
    * Silver tumbles 5 percent to lowest since late-June
    * Platinum hits more than 3-month low below $1,000/oz
    * GRAPHIC-Gold breaks key support: reut.rs/2dGKRQg

    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, Oct 4 (Reuters) - Gold slid more than 3
percent and was on track for its biggest one-day drop in nearly
15 months on Tuesday, reaching its lowest price since Britain's
shock vote to leave the European Union in June, as the dollar
rallied after upbeat U.S. data.
    Spot silver prices followed gold down, on track for their
biggest one-day tumble since January 2015 and reaching the
lowest price since late June.
    Forecast-beating U.S. manufacturing data on Monday, combined
with Tuesday's comment by Richmond Federal Reserve President
Jeffrey Lacker that there was a strong case for raising interest
rates, stoked expectations that the Fed will lift rates by
year-end and drove the dollar higher. 
    Precious metals prices further extended losses after data
showed the European Central Bank (ECB) slowed down its money
printing in the last week. 
    Gold's break of support at $1,300 an ounce, which had
arrested the metal's August decline, led to a flurry of selling
that took prices to the lowest in more than three months at
$1,266.33, a level not seen since June 24 in the immediate
aftermath of the UK's Brexit vote.
    Spot gold was down 3.1 percent at $1,270.31 an ounce
by 3:09 p.m. EDT (1909 GMT), while U.S. gold futures for
December delivery settled down 3.3 percent at $1,269.70 per
ounce.
    Silver was down 5.1 percent at $17.78 an ounce. 
    "(Lacker) started the assault on gold by indicating that the
Fed should be much more aggressive in its stance on interest
rates," said Phillips Streible, senior commodities broker for
RJO Futures in Chicago.
    Margin calls appeared to "step up" after gold fell below
$1,300 and silver below $18.50, forcing those holding long
positions to either liquidate or meet requirements, he said.
    The move was caused by "continued dollar strength, and
traders looking for stops below such a big level," Saxo Bank's
head of commodity research Ole Hansen said.
    Sterling slumped to a 31-year low versus the U.S. dollar on
concerns over Britain's separation from the European Union while
the greenback rose to a two-month high. 
    Traders are now turning their attention to U.S. payrolls
data for September, due at the end of the week.
    While Monday's data showing U.S. factories ramped up
activity in September fueled speculation that the Fed would lift
rates at its December meeting, officials remain
cautious. 
    Platinum was down 1.9 percent at $984.95 an ounce,
after falling to the lowest in more than three months at
$979.50. Palladium fell 2 percent at $697.15.

    
 (Additional reporting by Nallur Sethuraman in Bengaluru;
editing by Keith Weir and Cynthia Osterman)

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