NEW YORK/LONDON: Gold dropped as much as 9.6% yesterday, reversing sharp morning gains as a wave of panic prompted investors to dump assets across the board to meet liquidity needs.
Gold traded in a wide range of more than $100 an ounce yesterday, capping a volatile week with gains of only 1.3% even as global stock markets lost heavily.
Bullion in overnight trade touched a 2-1/2 month high of $931 as a slide in the global equity markets sent investors racing to a safe haven from the financial crisis.
However, even gold could not withstand relentless selling across all asset classes as investors sought cash to cover margin calls amid steep losses in stocks. It hit a low of $823.50.
Spot gold dropped to $845.80 at 2.50pm EDT (1850 GMT), down 7.2% from Thursday’s nominal close at $911.50.
“It’s total panic. People are so scared that they are looking to liquidate everything that has cash value and to stay away from everything,” said Bruce Dunn, vice president of New Jersey-based Auramet Trading.
Dunn cited a sharp rally of the dollar and heavy losses in crude oil for gold’s dramatic turnaround yesterday. “It’s clearly euro-dollar related. It’s also Friday so conditions are thin,” Dunn said. – Reuters
