RTTN: Gold Prices Drop $43 An Ounce As Dollar Strengthens
(RTTNews) - The price of gold dropped sharply on Thursday in early U.S. trading and moved to its lowest level in nearly two weeks. Gold for November delivery moved to $844.30, down $43 on the session. The metal hit as low as $833.50 earlier in the day and tested its 20-day moving average.
Gold's hedge appeal dropped as the dollar extended its yearly high against the euro. The greenback hit as high as 1.3746 against its major rival after the European Central Bank maintained its key interest rate but offered strong indications that a rate cut may be coming soon.
The financial world's eyes now are on the sweetened $700 banking bailout package, which was passed by the U.S. Senate by a comfortable margin. Still, the bill must be approved by the House of Representatives, leaving investors in a very cautious mood.
In other metals trading, silver for December delivery ended at $11.12 an ounce, down $1.65. October-dated platinum dropped $50.10 to $979.60 an ounce, falling below $1,000 for the first time in 1 1/2 years.
On the economic front Thursday morning, the Department of Labor's weekly report showed that jobless claims rose to 497,000 from the previous week's revised figure of 496,000. Economists had expected jobless claims to fall to 475,000 from the 493,000 originally reported for the previous week.
Later, a Department of Commerce report showed that orders for manufactured goods fell by 4.0 percent in August following a downwardly revised 0.7 percent increase in July. Economists had expected orders to fall by 2.9 percent compared to the 1.3 percent increase originally reported for the previous month.
Crude oil continued to plunge on Thursday, further diminishing gold's hedge appeal. Light sweet crude for November delivery moved to $95.77, down $2.76 for the session. Prices touched as low as $94.02 in mid-morning trading.
The price of gold turned higher again on Wednesday and finished higher by $6.50 on the session. Gold dropped away from a two-month high on Tuesday, closing down $13.60. The precious metal's hedge value took a hit as the U.S. dollar saw its largest one-day gain ever versus the euro.
The metal closed higher on Monday and then surged in post-market trading after the House failed to get the necessary 218 votes to pass a $700 billion rescue plan. December gold closed at $894.40 an ounce, up $5.90 on the session. After the metal markets closed, gold moved as high as $915.30 as traders flocked to the safety option.