Metals Price Watch: Gold on Track for Biggest Quarterly Loss Ever

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on Jun 26, 2013
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iNVEZZ.com, Wednesday, June 26: Precious and base metals both posted serious price declines today. The gold price fell to its lowest level in almost three years and now seems headed for its biggest decline in a single quarter on record due to strong US economic data released on Tuesday. The silver price also plunged. The copper price has lost a further 1.5 percent this week after shedding almost four percent last week.

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**Gold and silver**
The gold price plunged today to as low as $1,223.54 an ounce, the weakest reading since August 2010. Bullion traded at $1,240.72 an ounce as of 13:52 GMT.

Yesterday, US data showing strong gains in orders for durable goods, the largest annual rise in house prices in seven years and growing consumer confidence increased fears that the Federal Reserve would soon reduce its debt purchases, one of the strongest factors that has supported the gold price in recent years. The Fed currently buys $85 billion of debt every month, but the stimulus will be most certainly be scaled back as the US economy recovers. The eventual siphoning off of the added liquidity from the U.S. capital markets will raise interest rates and damp inflation, adding further pressure on gold prices.

Some analysts see even more bleak future for gold, saying that it could even go below $1,000 per ounce. At the same time, there is little potential for data, market trends or economic developments in the United States or Europe to reverse an accelerating investor exodus from gold.
“We bought gold for two reasons – because we were worried about the inflationary impact of policy and because we thought the financial system was going to fall apart,” said Sean Corrigan, chief investment strategist at Diapason Commodities Management, as quoted by Reuters. “Although it may be completely the wrong judgement, the market has decided that none of those at the moment is a concern.”

The silver price slid below $19 per ounce, diving as low as $18.39 an ounce, the lowest level since August 2010. The metal recovered some ground later in the day and as of 14:10 GMT could be found at $18.95. The platinum price fell 2.2 percent to $1,320.49 per ounce, while the palladium price tumbled 3.6 percent to $639.22 an ounce.
**Base metals**
!m[Weak Euro and Uncertainty over Chinese Demand Depress Copper](/uploads/story/3435/thumbs/pic1_inline.jpg)

The copper price slid further on Wednesday as weak euro, strong US economic data and concerns over the outlook for demand from the world’s biggest consumer China all weighed on the metal’s performance. Copper for delivery in three months fell to $6,737 a metric ton at one point today on the London Metal Exchange.
“Looking at fundamentals it would suggest that there is further downside for copper. We expect prices to fall below $6,000 a tonne next year due to additional mine supply and the weak state of demand,” said Ross Strachan, economist at Capital Economics, as quoted by Reuters.
The aluminium price also fell on the LME, sliding to $1,780 a ton from Tuesday’s close of $1,784.
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