MADRID (MarketWatch) — Gold prices fell sharply on Monday, in the face of a strong U.S. dollar and as analysts speculated that investors are continuing to cash in on the strong run the metal has seen this year so far.
April gold GCJ4 -1.33% fell $18.20, or 1.4%, to $1,317.80 an ounce, after adding $5.50, or 0.4%, to settle at $1,336 an ounce on the Comex division of the New York Mercantile Exchange on Friday. Last week also marked the worst weekly loss for gold since November, a drop of 3.1%.
Asia markets will dominate
ANZ Bank says Asia's financial system will be bigger than those of the U.S. and Europe combined by 2030, thanks largely to China.
“Perception that the U.S. economy will begin to regain its growth legs as we enter spring, and the reaffirmation from the Fed that tapering will be an ongoing event, continue to channel funds into the U.S. dollar and away from safe-haven plays,” said Peter Hug, global tradingdirector at Kitco Metals, in a note, adding that he’s eyeing $1,317-an-ounce as the next support level for gold.
The dollar index DXY +0.11% , which measures the U.S. currency against a basket of six major currencies, rose to 80.240 from 80.089 late Friday.
There were other reasons cited for that gold price fall. “This is due no doubt to further profit-taking after net long positions in gold were increased for the sixth week running in the week to 18 March,” said analysts at Commerzbank in a note. “At 121,100 contracts, they are currently at their highest level since the end of November 2012.”
Year-to-date, the precious metal has gained 10%, in stark contrast to a 28% plunge in 2013, the biggest drop since at least 1984.
The analysts noted that more pessimism abounds for silver, where net long positions were cut for the third week in a row to just 20,600 contracts, which they said also explains silver’s poorer performance in recent weeks versus gold. May silver SIK4 -0.74% fell 17 cents, or 0.9%, to $20.14 an ounce.
May high-grade copper HGK4 +0.56% rose 1 cent, or 0.4%, to $2.96 a pound. A worse-than-expected reading ofChina’s manufacturing sector has triggered talk among some economists of stimulus measures by the government. While that has yet to be seen, commodities such as copper have been fretting about a slowdown in the country that is a big user of natural resources.
Among other metals, June palladium PAM4 +0.91% rose $6.95, or 0.9%, to $796.60 an ounce, while April platinum PLJ4 +0.06% edged up 60 cents to $1,436.60 an ounce, but was still down 2.3% on the week.
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