Gold drops nearly $40 as selling accelerates Loss
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Gold drops nearly $40 as selling accelerates
Losses accelerate as major fund said to rebalance gold holdings
SAN FRANCISCO (MarketWatch) — There was no safe-haven bid for gold futures on Tuesday, with the yellow metal dropping sharply as investors shrugged off a U.S. government shutdown and analysts noted talk of heavy fund selling.
Gold for December delivery (CNS:GCZ3) dropped $38.40 ounce, or 2.9%, to $1,288.60 an ounce on the Comex division of the New York Mercantile Exchange. On Monday, gold fell $12.20, or nearly 1%, to settle at $1,327 an ounce, but marked the first quarterly gain in a year.
“Gold is selling off sharply with a lack of safe-haven demand in the short run,” said Jeffrey Wright, managing director at H.C. Wainwright LLC. “Part of the reason for the deflationary sentiment is the federal government is not expanding the deficit during the partial shutdown.”
A short shutdown has a minimal impact on the broader economy and does not change the Federal Reserve’s timetable on tapering quantitative easing, he said. Besides, the “bigger battle comes in two weeks with the debt ceiling. No deal on the debt ceiling will lead to safe-haven demand from all quarters and should cause a run on the U.S. dollar.”
But if the budget standoff stretches into next week, “then it could begin to negatively impact the U.S. dollar and drive demand for gold and other safe-haven assets,” Wright said. http://www.marketwatch.com/story/gold-bid-hig...2013-10-01
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