 "Gold plunges $100, safe haven image tarnished")
New York: Gold crashed more than $100 on Friday as a slide turned into a free fall, with weeks of volatility, renewed strength in the dollar and talk of hedge fund liquidation wrecking its safe-haven status.
The sell-off came even after relative calm was restored to the stock and oil markets following Thursday’s losses. Bonds also dived with gold and silver as investors took profit on a near week-long rally in US Treasuries.
Widespread talk of possible selling by big hedge funds covering losses in other markets set off one of the biggest routs on record in the precious metals group.
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The CME Group, which oversees trading in US gold and silver futures, responded by raising margins, or deposits, required on trades of the two precious metals as well as copper. The move would further squeeze the most optimistic investors in gold, who are trying to hold onto long positions or bets on higher prices.
“We’re making new lows and the bull case for gold is on pause for the near term,” said Adam Klopfenstein, senior market strategist for precious metals at MF Global in Chicago.
“In the near term, the flight-to-quality interest in owning gold is also out of the window as people are not interested in buying it even in the face of fears in the economy. Until it stabilizes, I’m staying out of this market.”
Mounting fears this week of a global recession and a deepening Greek debt crisis made investors treat precious metals like any commodity, ignoring the safe-haven appeal that had made them a must-have in times of trouble.
The spot price of gold, which tracks trades in bullion, saw its biggest plunge since the financial crisis in 2008. The plunge took out several key technical supports, including the100-day moving average for the first time since February.
By late Friday afternoon in New York, spot gold was down about 5 percent, after falling more than 6 percent earlier to touch lows from early August.
US silver futures closed 18 percent down, the biggest daily loss since 1987.
Reuters