Sunday, May 12, 2013

Gold Got Gutted: Here’s Why

From CNBC's Jackie DeAngelis and the "Futures Now" traders: gold dropped three percent Friday, suffering the worst decline of any widely followed commodity as it plunged to a two-week low.  Many experts blamed the weakness on the U.S. dollar. The Dollar Index, which compares the dollar to a basket of foreign currencies, has risen nearly two percent over two days, to levels it had not seen in over a month. A rising dollar tends to hurt gold, because it makes gold relatively less expensive in dollar terms.

That's how George Gero, precious metals strategist at RBC, explained it. "Dollar moves were attracting sellers to gold as a strong dollar priced gold higher," he said.  But Friday fear is also hurting the gold market, Gero said. "Short-term investors unwilling to hold positions over the weekend left sellers with few buyers, so support levels have been breached," he wrote in a Friday note….

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