Gold Falls 1%; Silver at $13
Gold slid another 1 percent on Tuesday as traders unwind the reflation trade in favor of cold hard cash.
Strength in the U.S. dollar unit resulted from selling of commodities, correcting much of the gains over the last few weeks.
Spot gold was bid at $921.20 an ounce at 1507 GMT, against $932.30 an ounce late in New York on Friday.
U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange fell $9.70 from Thursday’s close to $921.30 an ounce.
As the retracement in gold approaches $900, we expect buyers to enter the market. But as previously stated, once gold breaks below $900, more selling should occur.
Silver, after crashing through $14, approached $13, where buying should come in forcing shorts to take profits on the massive sell-off. While the correction could last several weeks, once gold breaks below $900, silver should also see more selling.
India, the world’s biggest consumer of bullion, announced it doubled import taxes on gold and silver as the government sought to raise funds to spend on roads and supply food grain to the poor at below market rates. These duties come as the country bought 51.8 metric tons of gold in the January-to-May period, compared with 115 tons a year earlier according to the Bombay Bullion Association. New duties can only further weaken a market facing crashing demand this year.
