Gold Futures Drop Most in Three Weeks, Silver Tumbles
Source: Bloomberg, Pham-Duy Nguyen (12/8/10)
"Gold is dominated by short-term traders at the moment."
The greenback rose for the third straight day against a basket of six major currencies on speculation that an extension of tax cuts will spur the U.S. economy. Before today, gold gained 29% this year, reaching a record $1,432.50 an ounce yesterday.
"Gold is dominated by short-term traders at the moment," said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. "Big players have taken a profit after record highs, and the dollar has stabilized, so short-term traders will sell gold and commodities."
Gold futures for February delivery dropped $32.60, or 2.3%, to $1,376.40 at 10:59 a.m. on the Comex in New York. A close at that price would mark the biggest decline for a most- active contract since Nov. 12.
Gold assets in exchange-traded products rose 2.22 metric tons to 2,101.37 tons yesterday, the highest since Oct. 15, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,104.65 tons on Oct. 14.
Silver holdings jumped 136.17 tons to 15,009.54 tons, data from four providers show. That marked the biggest gain in almost a month and the highest amount since at least February.
ETPs backed by silver represent a "new species of Hunt Brothers" that could be a "potential threat" to trading, said Jon Nadler, a senior economist at Kitco Inc. in Montreal.
Silver futures for March delivery tumbled $1.637, or 5.5%, to $28.14 an ounce, heading for the biggest decline since Nov. 10. Yesterday, the price reached $30.75, the highest since March 1980.