Gold News & Info

Source: Financial Times

London— Gold retreated further from Monday�s highs on Wednesday, threatening to fall below $500 a troy ounce after a second consecutive day of heavy falls. The decline dragged silver and platinum prices lower too, as Japanese private investors that were big buyers of gold turned sellers.

Gold was trading at $511.10/$511.90 a troy ounce in late London trade, down from its late New York quote of $520.60/$521.30 on Tuesday, and down almost $30 from its 24-1/2 year high touched on Monday.

Martin Stokes, vice president commodities at JP Morgan, said the gold price slide was triggered by the US Federal Reserve rate hike, and the selling continued in Japan as the dollar fell through the Y117 level against a strengthening yen.

Gold normally has an inverse relationship to the dollar: when the dollar goes up, gold falls. �Now, as investors from other currency areas become significantly involved with gold, the correlation has turned 180 degrees. So now, a weaker dollar has led to weaker gold as Japanese traders see lower prices in local yen terms and stop out, or hopefully, take profits,� Mr Stokes said.

Silver bounced off its intra-day lows to trade at $8.48/$8.51 a troy ounce, down just one cent on the day. Platinum slid $27 to $964/$968 an ounce.

Base metals were also sold off, having enjoyed a strong rally in recent weeks to touch long term highs. The three month copper price was $92 lower at $4,447 a tonne on the London Metal Exchange and three-month LME aluminium eased $32 to $2,219 a tonne.

Oil prices weakened after US government data showed US crude oil inventories rose by 900,000 barrels in the week to December 9, confounding expectations of a fall. US petrol stockpiles rose 1.8m barrels and there was a very small drop in distillates, which include heating oil and diesel, inventories.

IPE Brent for January delivery gained 25 cents to $59.77 a barrel in late London afternoon trade. With the January Brent contract to expire at the end of Thursday, most of the trading was in the February Brent contract, which added 4 cents to $60.04 a barrel.

January Nymex WTI slipped 27 cents to $61.10 a barrel in early afternoon New York trade.

US natural gas futures fell from their record high of $15.78 per million British thermal units in the previous session. The benchmark natural gas futures contract slipped 60 cents to $14.78. US temperatures are expected to remain below average through to Christmas and with significant amounts of gas production in the Gulf of Mexico still shut-in following the recent hurricanes, natural gas prices are expected to remain firm.