Investing.com - Gold futures dropped to the lowest level since mid-January on Thursday, as a broadly stronger U.S. dollar and bearish chart signals saw the precious metal come under heavy selling pressure.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,635.05 a troy ounce during U.S. morning trade, tumbling 0.91%.
It earlier fell by as much as 1.35% to trade at USD1,627.75 a troy ounce, the lowest since January 13.
Gold futures were likely to find support at USD1,612.35 a troy ounce, the low from January 10 and resistance at USD1,661.75, Wednesday’s high.
Gold’s losses accelerating after prices broke below a key support level close to USD1,633, triggering fresh sell orders and indicating a downward momentum in prices.
Traders have shied away from initiating fresh long positions in the precious metal amid concerns over a sharper near-term correction after prices broke below their 200-day moving average near USD1,675 an ounce on March 14.
Market participants noted that with prices now trading well below their long-term technical support, gold could extend losses to USD1,523 an ounce in the short term before recovering.
Gold prices have been under pressure in recent weeks as hedge funds and large institutional investors unwound long gold positions after the Federal Reserve gave an upbeat assessment of the U.S. economy earlier in the month, which reduced expectations for a third round of U.S. monetary easing by the central bank.
Gold has fallen almost 9% since hitting rising to USD1,790 in late February and are about 15% below the all-time high of USD1,920 per ounce hit in September.
Gold prices continued to take cues from the currency market, tracking movements in the euro. Gold remains more sensitive to moves in the euro/dollar exchange rate in the short term than to rising risk aversion, which in the past has been a positive driver of prices.
The single came under pressure following the release of data showing German manufacturing activity dropped to a four-month low in March, while manufacturing in France also contracted.
A separate report showed that manufacturing activity in the euro zone slumped unexpectedly in March, remaining in contraction territory for the eighth consecutive month.
Renewed concerns over the fiscal health of debt-laden euro zone members, Spain, Portugal and Italy also weighed on the single currency.
Italian and Spanish debt yields continued their march higher, amid concerns over Spain’s slow progress in boosting its finances, while Italy faced stiff opposition to its severe austerity steps, with the country's largest trade union calling a general strike over labor reforms.
Meanwhile, Portugal is braced for a 24-hour general strike against the government’s austerity measures introduced by the government in return for the country’s EUR78 billion bailout.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.31% to trade at 80.05, the highest from March 16.
Gold prices were lower during the Asian trading session on news that Indian jewelers have extended the first nationwide strike in seven years for two additional days further weighed on the precious metal.
The strike will continue till Friday and it is still uncertain how long this impasse will continue. The move comes in response to a 4% hike in India’s customs duty on gold announced last week. India is the world's top gold consumer.
Elsewhere on the Comex, silver for May delivery plunged 2.4% to trade at USD31.46 a troy ounce, while copper for May delivery tumbled 2.15% to trade at USD3.763 a pound.
Market analysts said silver could fall to as low as USD30.20 an ounce after breaking a near-term support of USD31.50 on hourly chart earlier in the day.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,635.05 a troy ounce during U.S. morning trade, tumbling 0.91%.
It earlier fell by as much as 1.35% to trade at USD1,627.75 a troy ounce, the lowest since January 13.
Gold futures were likely to find support at USD1,612.35 a troy ounce, the low from January 10 and resistance at USD1,661.75, Wednesday’s high.
Gold’s losses accelerating after prices broke below a key support level close to USD1,633, triggering fresh sell orders and indicating a downward momentum in prices.
Traders have shied away from initiating fresh long positions in the precious metal amid concerns over a sharper near-term correction after prices broke below their 200-day moving average near USD1,675 an ounce on March 14.
Market participants noted that with prices now trading well below their long-term technical support, gold could extend losses to USD1,523 an ounce in the short term before recovering.
Gold prices have been under pressure in recent weeks as hedge funds and large institutional investors unwound long gold positions after the Federal Reserve gave an upbeat assessment of the U.S. economy earlier in the month, which reduced expectations for a third round of U.S. monetary easing by the central bank.
Gold has fallen almost 9% since hitting rising to USD1,790 in late February and are about 15% below the all-time high of USD1,920 per ounce hit in September.
Gold prices continued to take cues from the currency market, tracking movements in the euro. Gold remains more sensitive to moves in the euro/dollar exchange rate in the short term than to rising risk aversion, which in the past has been a positive driver of prices.
The single came under pressure following the release of data showing German manufacturing activity dropped to a four-month low in March, while manufacturing in France also contracted.
A separate report showed that manufacturing activity in the euro zone slumped unexpectedly in March, remaining in contraction territory for the eighth consecutive month.
Renewed concerns over the fiscal health of debt-laden euro zone members, Spain, Portugal and Italy also weighed on the single currency.
Italian and Spanish debt yields continued their march higher, amid concerns over Spain’s slow progress in boosting its finances, while Italy faced stiff opposition to its severe austerity steps, with the country's largest trade union calling a general strike over labor reforms.
Meanwhile, Portugal is braced for a 24-hour general strike against the government’s austerity measures introduced by the government in return for the country’s EUR78 billion bailout.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.31% to trade at 80.05, the highest from March 16.
Gold prices were lower during the Asian trading session on news that Indian jewelers have extended the first nationwide strike in seven years for two additional days further weighed on the precious metal.
The strike will continue till Friday and it is still uncertain how long this impasse will continue. The move comes in response to a 4% hike in India’s customs duty on gold announced last week. India is the world's top gold consumer.
Elsewhere on the Comex, silver for May delivery plunged 2.4% to trade at USD31.46 a troy ounce, while copper for May delivery tumbled 2.15% to trade at USD3.763 a pound.
Market analysts said silver could fall to as low as USD30.20 an ounce after breaking a near-term support of USD31.50 on hourly chart earlier in the day.