Gold, Silver Drop Most in Three Months on Economy, China

Gold and silver futures fell the most in three months amid concern that the global economy is slowing and China may refrain from additional economic stimulus.

Bank of Israel Governor Stanley Fischer said the world is “awfully close” to a recession. People’s Bank of China Deputy Governor Yi Gang said that while policy makers will provide “appropriate” stimulus to stabilize growth, the central bank’s main task is price stability, citing bubble risks in housing.

“There are no clear signals from China whether there will be more stimulus,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Also, overall slowdown concern is sending all commodities, including precious metals, down.”

Gold futures for December delivery tumbled 1.3 percent to settle at $1,737.60 an ounce on the Comex at 1:47 p.m. in New York, the biggest drop for a most-active contract since July 6. The metal fell 1.2 percent last week.

Silver futures for December delivery declined 2.8 percent to $32.743 an ounce, the largest decline since June 21.

The Standard & Poor’s GSCI Spot Index of 24 raw materials slipped as much as 1.4 percent to a one-week low.

Gold declined before tomorrow’s second U.S. presidential debate because investors are concerned that Republican Mitt Romney may cut government spending if elected, Streible said.

“Romney strength is negative for gold as he is anti- government spending,” Streible said.

Some polls showed that Romney gained momentum following the first debate against President Barack Obama on Oct. 3. The election is on Nov. 6.

On the New York Mercantile Exchange, platinum futures for January delivery slumped 1.6 percent to $1,632.30 an ounce. Palladium futures for December delivery slipped 1 percent to $632.60 an ounce.

Bloomberg

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell