Gold Sinks To Two-Year Low At $1,453 On Cyprus

Gold prices sunk to a two-year low of $1,453 on Monday, sparked by fears that central banks in heavily-indebted eurozone countries may be forced to sell their gold holdings. This came after the announcement by Cyprus that it was going to sell a large part of its gold holdings to finance its bailout plan.

- Gold fell 3.48 percent or 52.41 points to trade at 1,452.97

Gold`s losses accelerated sharply on Monday, after it fell sharply to settle below $1,500 an ounce down 4.5% on Friday, it’s lowest since July 2011, This sparked bargain hunting, sending the metal to levels near 1425.00.

Precious-gold fell along with other commodities as the dollar rose. Weak retail sales data issued on Friday showed unexpected contraction in March, while the psychological impact of potential selling by Cyprus continued to take a toll.

As of (09:52 GMT+3), the dollar index hovered around 82.28 after opening at 82.15; USDIX hit a high of 82.31 and a low of 82.12.

Eurozone Finance ministers finalized the terms of the 10 billion euro bailout for Cyprus, originally agreed on in March by the Troika. Last week, a European Commission assessment indicated that Cyprus plans to sell 400 million euro worth of excess gold reserve.

However, Jeroen Dijsselbloem, the Dutch finance minister said there will be on pressure on Cyprus to sell its gold to fund the bailout.

Cyprus` gold sale in itself is small compared with the 17.4 tons of gold sold by France in 2009, yet it raised speculations that heavily indebted euro zone nations such as Italy and Portugal might be under increasing pressure to sell their bullion reserves.

Other commodities also came under pressure:

- Silver inched down 6.94% to trade around 24.60

- Platinum lost 2.17% to 1,462.50

- Palladium came lower by 3.38 % to 683.90

Furthermore, recent cuts to gold price forecasts continued to hurt sentiment toward gold, which prompting investors to lose safe-haven confidence in the precious metal.