Gold futures are sliding back toward $900 an ounce as waning investor and jewelry demand saps support and participants sell the metal to raise cash to deal with recent stock-market declines.
Thinly traded nearby March gold declined $26.10, or more than 2.7%, to settle at $912.90 an ounce Tuesday on the Comex division of the New York Mercantile Exchange. The most-active April contract fell $26.40 to settle at $913.60.
Banks and hedge funds continue to sell the metal as they look to raise cash, said Pat Donnelly, senior broker with Peak Trading Group.
The institutions need the money for margin calls or losses after recent declines in the equities market, said Michael Gross, broker and futures analyst with OptionSellers.com. "They're going where they have some money stored up," he said, noting the recent uptrend in gold prices.
The Dow Jones Industrial Average had fallen 10 of the past 12 sessions through Monday, losing almost 15% in that span. The stock selloff helped prompt haven buying in gold, sending the April contract to $1,007.70 on Feb. 20, from where it has tumbled more than 10% through Tuesday's $905.70 intraday low.
It has broken through key technical chart-based trading points on its descent, said Sterling Smith, vice president with FuturesOne. The first major sell point came around $950 and then Tuesday around $920, Mr. Smith said.
The metal is now developing an equilibrium price around a stronger band of support between $890 and $910, he said.
Mr. Smith added that pressure on gold also came on aftershocks of news from Monday that India's February gold imports crashed to near zero from 23 metric tons a year ago as buyers stayed away amid soaring prices and the economic slowdown. India is the world's top gold buyer for jewelry.
Source : online.wsj.com