Gold and silver futures slumped to five-week lows as the dollar’s rally eroded demand for precious metals as alternative investments. Palladium and platinum dropped the most since December.
The greenback rose to a two-week high against a basket of currencies. Europe’s economy contracted in the fourth quarter, and Richard Fisher, the president of the Federal Reserve Bank of Dallas, said yesterday that he opposes more purchases of securities by the central bank, damping expectations for additional stimulus. A gauge of 24 commodities fell the most in 11 weeks.
“The dollar’s strength is weighing on the market,” Lance Roberts, the chief executive officer at Streettalk Advisors LLC in Houston, said in a telephone interview.
On the Comex in New York, gold futures for April delivery fell 1.9 percent to settle at $1,672.10 an ounce at 1:45 p.m. Earlier, the metal touched $1,663.40, the lowest for a most-active contract since Jan. 25.
Gold closed below the 200-day moving average, a bearish signal sign to some investors who study price charts.
“A breach of this level should bring in significant momentum selling and stop-loss selling,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview.
Gold slumped 3.7 percent last week while the dollar gained 1.3 percent against the six-currency basket. Yesterday, holdings in exchange-traded products backed by the metal rose to a record 2,405.9 metric tons, data tracked by Bloomberg showed.
“The environment of geopolitical and macroeconomic uncertainties, together with ultra-low interest rates, continues to draw steady investment inflows,” James Moore, an analyst at TheBullionDesk.com in London, said in a report.
The Standard & Poor’s GSCI Spot Index of 24 raw materials slumped 1.5 percent, poised for the biggest decline since Dec. 14.
Silver futures for May delivery fell 2.7 percent to $32.783 an ounce on the Comex. Earlier, the price touched $32.49, the lowest since Jan. 25. The metal slipped below its 200-day moving average on March 2.
On the New York Mercantile Exchange, palladium futures for June delivery slumped 5 percent at $671.60 an ounce, the biggest drop since Dec. 14. Platinum futures for April delivery slid 3 percent to $1,611.90 an ounce, the largest decline since Dec. 28.