Gold for December delivery shed $27.30, or 1.6%, to $1,697.90 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, it sank by as much as $44 to touch a low of $1,681.50.
Gold has some large and powerful forces acting upon it which are presently cancelling each other out,” said Ross Norman, chief executive at London-based bullion broker Sharps Pixley, in a note Tuesday.
“Those forces are phenomenal flows of investment money into gold reflected by a surge in demand for [exchange-traded funds] and physical bars on the one hand,” he said. On the other: “the negative impact on gold from a stronger dollar. So, its safe haven status against dollar strength — two traditional and powerful drivers of the gold price [are] at odds with each other.”
On Tuesday, the dollar index DXY +1.13% , which tracks the performance of the greenback against a basket of other major currencies, rallied to 77.453, up from 76.243 late Monday.
Strength in the dollar tends to dull demand for gold and other commodities since it becomes more expensive for holders of other currencies to buy them.
But gold prices pared losses a bit after news that the ISM manufacturing gauge fell to 50.8% in October. Economists surveyed by MarketWatch had expected the Institute for Supply Management to report that its manufacturing-activity index edged up to 52.1% in October from 51.6% in September.
Looking ahead, Norman said that gold is “poised for a move significantly higher as the Greek tragedy has not yet fully played out yet. The safe haven role will prevail as the key driver of gold prices as investors seek a lifeboat in crisis,” he said.
The Greek government announced Monday it would hold a referendum on the latest bailout in the face of growing public anger over further austerity measures and a deepening recession.
Against that backdrop, other metals followed gold lower.
Silver futures for December delivery fell $1.19, or 3.5%, to $33.17 an ounce on Comex and December copper HG1Z -2.95% traded at $3.50 a pound, down 13 cents, or 3.6%.
January platinumshed $28.60, or 1.8%, to $1,579 an ounce and December palladium PA1Z -1.79% lost $15.80, or 2.4%, to $635.35 an ounce For the latest updates PRESS CTR + D or visit Stock Market news Today
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