Gold slides for 5th straight session

Prices continue to fall on weakening demand in China and India.

By TheStreet Staff Dec 28, 2011 1:06PM

By Kaitlyn Kiernan

 

Gold (-GC) was falling for the fifth consecutive day Wednesday because of two factors: the strengthening dollar and growing concern that demand is weakening in the world's two largest countries.

 

Gold for February delivery was dropping $28 to $1,567.50 an ounce at the Comex division of the New York Mercantile Exchange. The metal has traded as high as $1,595 and as low as $1,571.80 an ounce, while the spot price was down $20, according to Kitco's gold index.

 

Silver (-SI) prices for March delivery were down $1.38 at $27.36 an ounce, while the U.S. dollar index was gaining 0.4% to $80.18.

 

Gold was declining after a Chinese government crackdown on illegal gold exchanges raised concern that demand there would weaken.

 

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China's central bank ordered all gold exchanges, with the exception of two official exchanges in Shanghai, to cease operations, according to a statement Tuesday. The two official exchanges, the Shanghai Gold Exchange and the Shanghai Futures Exchange, are enough to meet domestic demand for the metal, said the notice, released jointly by the People's Bank of China and the Ministry of Public Security.

 

The Chinese crackdown on illegal gold trading venues comes after an announcement earlier in the week that demand for gold from India, the world's second-largest country by population, may also decline. Indian imports of the metal may drop 50% this month as the rupee's tumble against the dollar continues for a fourth month, according to the Bombay Bullion Association.

 

The currency slid to 53.03 rupees to a dollar on Dec. 27, from 44.08 on Aug. 1. The lower rupee makes gold, a dollar-backed commodity, more expensive to buy in India.

 

Italy's successful bond auction also put pressure on the precious metal.

 

The country successfully sold 9 billion euros ($11.8 billion) in six-month bonds at auction Wednesday at a rate far lower than at its auction on Nov. 25. The Italian treasuries were sold at a rate of 3.251%, compared with 6.504% last month. 2013 year notes also sold at a lower rate of 4.853%, down from a yield of 7.814% on Nov. 25.

 

Italy's lower borrowing costs dampened chances of the European Central Bank printing more euros to stem the debt crisis, reducing demand for the metal as a haven against inflation.

 

Gold mining stocks followed the metal lower Wednesday. Goldcorp (GG) was falling 1.6% to $43.54. Barrick Gold (ABX) was dropping 1.9%% at $44.65. Kinross Gold (KGC) was declining 1.9% to $11.34.

 

Smaller mining companies also fell. Agnico-Eagle (AEM) was slumping 1.7% to $35.51. Hecla Mining (HL) was dropping 2.4% to $5.27.

 

15Comments
Dec 28, 2011 2:18PM
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EVERYONE said " gold is going over 2,000, the price of cars will soon be priced higher then Homes, We are all going to live in Enviromental Huts,

Dec 28, 2011 5:37PM
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It was $1300 this time last year. Could be again soon.

 

Remember this about gold. You cannot eat it. You cannot drink it. It will not power a motor vehicle or make a plane fly.

 

The only people who profit when gold goes up, as it has since 2000, are guys like me who have mined it since it was around $35 an ounce.

 

Also the "brokers" that you suckers go to when you decide to "buy" some because you are scared that paper money is becoming worthless.

 

They also ream your back side when you sell it. Ever notice that? Or what the "broker" is driving and you aren't? Smile

Dec 28, 2011 3:30PM
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GOOD!!!!SmileSmilesince gold was so high I cannot buy any jewelries.  I hope it keep going down.  SORRY PEOPLE whoever are stashing gold you sell it now.  I hope to go down about another 400 us dollars.  just saying
Dec 28, 2011 6:17PM
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When countries go belly up, what do they liquidate first??  Its not their land..  The world will be swimming in pretty paper weights.   You would rather have a sack of potatoes if it gets that bad.  Trade and bartering will be the commerce.  I won't be taking anything I can't eat, clothe or build shelter or fuel.   Seed will be money.   Now if things don't get that bad, then gold will be like any other commodity.  At this time the gold market acts like the Beanie Baby market a few years ago.  Get that gold out of your gun safe and become debt free.  The lower it goes the more doom and gloom ads you will see  trying to scare you into buying more.   This is a game that the little guy should have never gotten sucked into especially after just beginning to recover from the rape of retirement investments.  Happy New Year All. 
Dec 28, 2011 4:07PM
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Just like always, the big shots got out in time and it is the retail level investor who was late to the party and will get fleeced.

Dec 28, 2011 4:54PM
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Open-mouthed My cash still has the same face value is liquid legal tender and ready for spending/pay bills and I don't need to go thru the hustle of selling.Nerd
Dec 28, 2011 7:07PM
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Most of the previous comments are from fools. If things go so bad that you are worried about how you can't eat it burn it or run a generator with it- then LEAD in the form of ammo is what will REALLY MATTER. You and your peacenik friends can have all the seed money you want and when the guys from mad max show up you will be slaves unless you have enuf lead.

If things get really bad but not that bad, gold will be the 1st money used in a post barter economy.

As for the "bubble"  business - gold demand has a fairly predicable cycle and this is the low period. The Indian wedding season is over -that is a big driver of demand in the Autumn. Thats all.

Dec 29, 2011 3:57AM
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My advise to most  of you "except jewelers?" is to get out of gold now.  I remember when silver was $40.00 back near 1980 and I got it at $4..00 dollars an ounce, but I didn't sell till it was  $10.00 an ounce and falling.  You can turn  your investment around by going long "Lithium" for solar charged batteries or LEXG on the ticker:  lithium exploration group  of a lithium mining group.  What I did back in Y2K was  invest in Sheepherder Wood/Coal cookstoves, an Energy Corp in Utah, that is an International bestseller.  I sold a 1908 "no motto" in uncirculated condition on eBay and bought the Sheepherder from ready made resources  and happiness is a stock that doubles in a year.  The stove saved barrels of oil and heated homes, that in savings reduced my oil consumption  and doubled my income, verse the 1908 no motto.  So cash in your gold now and be bullish my two investment resources.  Next we'll be short-selling Oil.  Free at last!
Dec 29, 2011 9:30AM
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Open-mouthed Gold's value is what the pawn shops pays you for it  about  60% to 90% less than  what you paid for your jewels.Nerd
Dec 29, 2011 7:49PM
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Look at all the saber rattling about Iran.  What do you think this is going to do for gold?  Iran is threating to shut down a big chunk of the world's oil supply.  Oil prices will skyrocket threating to push the world economy into recession which will mean even more money printing to keep things falsely pumped up.  To keep the oil flowing will mean all out war against Iran further increasing our deficit.  Iraq may descend into anarchy.  Hell, all the GOP candidates other than Ron Paul have already basically declared war on Iran.  We are just winding up two wars but are already getting dragged into another one.  Obama can pussy foot around but may just end up drawing Iran into a fight over sanctions to appease the military establishment.  Iran's clerical dictatorship is feeling pretty cocky right now and is just biding time until they go nuclear.  The Hormuz is only 4 miles wide so occupying a chunk of Iran will be the only way to keep it open.
Dec 29, 2011 7:15PM
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I bought a bunch of gold at $320 an ounce a long time ago.  You think I'm going to sell it now because of a little dip?  Hell no way!  It's turned out to be the best investment I have ever made.  Give it another 5 or 10 years and see were it is at!  Probably at least double of it's price today!

Some say you can't eat it or use it to fuel your car which is bull.  I can take one Krugerrand to the pawn shop and live off it for a few weeks!  If I want to sell 10, I can send them to an exchange and even do better!

At today's prices, I could have bought my home for a few hundred Krugerrands!

Dec 29, 2011 3:47AM
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                                                         BOO!

 

 

i just spooked the gold bubble!!Surprised

Dec 28, 2011 2:07PM
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ooooopseeeeee, some one poked the bubble that hide the gold;   BUUUUUUUUUUUUUUSH darn you!!!!!
Dec 29, 2011 6:38AM
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$1537 right now and falling! IF you bought any at $1000 or more, I advise you to sell it today!

 

RIGHT NOW!

Dec 28, 2011 7:27PM
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save money, dont buy gold or gas.    Save your money.!  Walk more, avoid putting gas at all cost.   They are ripping us off.   Gold is not good for anything but getting Robbed.   Smile
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