NEW YORK (Scrap Monster) : The precious metal reeled under strong institutional selling pressure, signaling the end of a 12 year run and raising concerns of entering into a strong bear market trend.
Across the board selling was witnessed in all precious metals, especially Gold. The bullion breached the key psychological support zone of $ 1500 an ounce for the first time in almost two years. It has confirmed a third straight week of decline. The intensity of the fall seems to be accelerating every new week. The weekly decline of over 6% is the highest since December 2011.
$ 1536-the 20% lows from the September 2011 record peak of $1,920.30 which was widely believed as a key support, was taken off with no respite. Once gold broke the major support level of $1,521 an ounce which was the December 2011 lows, it witnessed heavy sell-off. The spot price of bullion hit as low as $1,477 per ounce. U.S. gold futures for June delivery fell to as low as $1,476 an ounce.Hard to believe, but it is nothing but fact that the precious gold has plunged 23% from its record highs.
Reports state that SPDR Gold Trust-the world’s largest gold-backed ETF further slashed its gold holdings. The net holdings saw an erosion of another 2.1 tonnes on Thursday.
Is it a falling knife? Where could the prices finally rest? Analyst community appears to be not divided at least on the short to medium term outlook. The precious metal is in clear downtrend, they say. The recovery of US economy and the rebounding equity markets may lead to migration of safe-parked money out of the non-risky assets.
The Eurozone finance ministers’ two-day summit at Dublin has not sent any signal so far to assume that there would be any upgrades to the earlier announced 10 billion fund loan to aid Cyprus bailout. This may persuade Cyprus to shed off its huge gold reserves, which in turn opens up chances of Italy, Spain, Portugal and the like following suit.
Other precious metals also sold off, with silver the biggest loser, sliding 5.36 percent to $26.12 per ounce. Spot palladium was down 2.5 percent at $710, while spot platinum was down 2.8 percent at $1,489.49 an ounce.