Gold Prices Tumble as Rise Appetite Grows

(CEP News) - A rise in risk appetite is hurting gold prices as investors jump back into equity markets on Tuesday.

Gold has been on a strong down trend since the open of the Asia session. The sell-off picked up steam following the open of the North American trading session and prices are now trading below $900 an ounce.

Positive news from Citigroup is helping to boost the positive sentiment and hurting safe haven investments like gold. The positive sentiment was ignited by a leaked memo from Citigroup. According to an article in the New York Times, the firm earned more than $19 billion in the first two months of 2009.

Mike Glaser, futures broker from LaSalle Futures said although the strong rally in equity markets is a good sign that confidence is reemerging in markets, the rally is unsustainable. He pointed out that there are still a lot of concerns regarding the U.S. and global economy that will continue to support the precious metal.

With gold breaking through $900, Glaser expects $880 to hold as a major support level. A break of $880 could lead to sharp fall in with prices finding support at the 100 day moving average at $840.

Commodity strategists from Barclays Capital are looking for more weakness in gold. Lower interest in gold as an investment tool and weaker demand in jewelry markets are both bearish sign for the precious metal, they added.

WTI Crude oil is down $1.48 to $45.59 while ICE crude oil is trading down $0.26 to $43.87.

Meanwhile, ICE RBOB gasoline futures are up $1.73 to $135.24 and Globex natural gas is unchanged at $1.26. Heating oil at the ICE is up $1.49 to $123.03.

In the mining sector, spot gold is trading down $24.78 to $897.20 USD. In Canadian dollars, gold is down $44.73 to C$1154.37. Silver contracts at the CBOT are down $0.38 to $12.53.

Bloomberg’s index for base metals is up 2.63 points to 116.23. Wheat futures at the CBOT are up $9.50 to $532.75.

All data taken at 2:44 p.m. EDT

By Neils Christensen, neilsc@economicnews.ca

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Posted in Categories: Canada, Commodities, Economy, Eurozone, Releases, USA.

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