Gold suffers biggest drop in months
Gold fell over 1 per cent to a one-month low on Friday, its biggest daily drop in more than three months, hit by technical selling and tumbling US equities on economic uncertainty around the world.
Spot gold was down 1.2 per cent at $US1720.90 an ounce in late New York trade, after hitting a low of $US1715.79, which marked the cheapest price since September 7.
US COMEX gold futures for December delivery settled down $US20.70 an ounce at $US1724, with trading volume about 10 per cent below its 30-day average, preliminary Reuters data showed.
Gold also notched a near 2 per cent decline this week, its biggest weekly drop in about 4 months. The metal has so far failed to trade above $US1800 an ounce this year.
Silver and platinum group metals also slid broadly after several US multinational manufacturers led by General Electric gave earnings forecasts that disappointed investors, citing weaker demand in Western Europe.
Bullion appeared to find support at its 50-day moving average after it briefly broke below that key technical support. It has now erased all of its gains posted after the Federal Reserve in early September launched a third round of bond-buying known as quantitative easing to stimulate economic growth.
"People who rushed in for QE expecting to get a significant lift are getting out of the market," said Frank McGhee, head precious metals trader of Integrated Brokerage Services LLC.
"The longer we don't make a new high, the more people start getting nervous about where gold is trading," McGhee said.
Some traders said profit-taking could further pressure gold prices, after hedge funds and money managers raised their gold futures positions to their most bullish in nearly 14 months last week, the US Commodity Futures Trading Commission (CFTC) Commitment of Traders report showed.
Bullion weakened as German Chancellor Angela Merkel raised new hurdles to using the euro zone's rescue fund to battle the region's debt crisis. Gold was already under pressure from disappointing economic data this week including US home resale and a jump in jobless claims, and signs China's economy has slowed.
Gold's trading well below its record high during European debt worries suggests the metal could see further weakness, veteran trader Dennis Gartman told clients in a note.
"Something's amiss in the gold market and its health is growing more and more suspect," Gartman said.
Gold hit an all-time high of $US1920.30 set in September last year.