Gold prices fell further in early Asian trading Tuesday morning after a horror 18 hours across all trading timezones on Monday.
Comex electronic prices were back under $US1,100 just after 7.30am – down $US35 an ounce or 3%.
The plunge in gold was ignored on Wall Street and on our overnight share futures contract.
Wall Street rose by around 0.07% for the Dow, our market should start with a gain of 10 points or less later this morning.
The Aussie dollar was trading around 73.70 US cents this morning.
Local investors though will have a small bit of good news – spot iron ore prices rose 4% overnight to just under $US52 a tonne.
Gold prices had earlier plunged 4% and more to their lowest in more than five years on Monday, thanks to a concerted selling wave by investors in China, which is the biggest producer and consumer of the metal around the world.
The selling was triggered around 11.30 am Sydney time in deals on Comex, then Shanghai which saw the price plunge to a low of $US1,088 an ounce within minutes. Prices recovered the $US1,100 level in later trading but remained volatile in the rest of dealings in Asia, Europe and the US.
The slide in gold was helped by a firmer tone for the US dollar, but it was the selling out of China which shocked gold bulls (who have believed China has been buying heavily in gold markets in recent years, not selling). Five tonnes of gold were sold in one line around 11.30 am yesterday and that triggered the big slide.
The selling came out of hours for European and US traders, which was why it was done then and in Shanghai.
Spot platinum fell for the fifth straight session, down 5% to a fresh six and a half year lows, oil was weaker under $US60 a barrel in New York trading, copper was also weaker.
“Illiquidity was important in the Asian overnight move, with Japan and other countries on holiday … it was just a bit of a bear raid and there was nobody on the other side to mop up the selling,” Societe Generale analyst Robin Bhar told Marketwatch.com
The weaker gold prices yesterday helped drive shares of Newcrest Mining, Australia’s biggest independent listed producer, down more than 10% to $11.87.
Evolution Mining (EVN), which has spent hundreds of millions of dollars acquiring new mines this year, was among the hardest hit, falling 14.5% to a three-month low of 97 cents.
Shares in Northern Star Resources (NST), which like Evolution is lifting its ranking among Australian gold miners, dropped 9.6% to $2.07. Gold Road Resources (GOR) shed 10.9% to 35.5 cents, while Kingsgate Consolidated (KCN) saw its shares slump by more than 8% to 67 cents.
And there was also a big sell off in gold stocks around the world, most notably Barrick, the big Canadian miner (and the world’s largest). It hit a 24 year low last Friday and then plunged even further overnight – losing around 13%. Newmont was down 11% at one stage.
