Wed Aug 24, 2011 5:06pm EDT * Gold futures' biggest one-day price drop since 1980 * Futures volume looks headed for a record * Strong U.S. durable goods orders dent safe-haven appeal By Frank Tang NEW YORK, Aug 24 (Reuters) - Gold futures fell more than $100 on Wednesday, one of the steepest falls ever, as strong U.S. economic data and expectations of more Federal Reserve stimulus accelerated profit taking from the safe-haven record high of a day ago. Selling spiraled out of control as money managers competed to liquidate positions in COMEX futures, which experienced their biggest single-day dollar loss since 1980. Volume looked like a record. The price of gold bullion is now more than $150 below Tuesday's all time high of $1,911.46 an ounce, downed by intense speculation about whether the Fed will announce new plans to ease monetary policy at a meeting late this week. Analysts said it was time for gold investors to take money off the table after the rally extended too far, too fast in recent weeks. Bullion rose as much as $400 since July. "You have a commodity that retail investors, hedge funds and everybody were long, and the technical indicators showed it was overbought. It was just a matter of time before the market starts cracking," said Mihir Dange, COMEX gold options floor trader for Arbitrage LLC. Spot gold XAU= was down 4.1 percent to $1,754.59 an ounce by 3:37 p.m. EDT (1937 GMT), off its session low of $1,749.39. Before gold began recoiing Tuesday from above $1,900, it had risen nearly 9 percent over six sessions. U.S. gold futures for December delivery GCZ1 settled down $104 at $1,757.30 an ounce. Reuters data showed that is the biggest price drop of the continuous, front-month contract since Jan. 22, 1980, when it tumbled almost $150. On a percentage basis, it was the steepest fall since December 2008, during the financial crisis. COMEX futures volume topped 430,000 lots, on pace to surpass a record from Aug. 9, preliminary Reuters data showed. Silver XAG= dropped 5.9 percent to $39.34 an ounce. Gold came under pressure after steadying overnight, after a report showing new orders for U.S. durable goods orders rose 4 percent in July, more than expected and offering hope the ailing economy could dodge a second recession. [ID:nN1E77N096] Analysts warned of a sharp correction from this month's rally was possible, especially if Friday's central bank meeting at Jackson Hole, Wyoming does not result in a Fed announcement of a third round of government bond buying, or quantitative easing, also known as QE3. "The correction really should be taking place now, because of all the (bets) on the table," said Ashok Shah, chief investment officer at London & Capital. "But the journey is not complete until Jackson Hole is done," Shah said. The Fed conference starts on Thursday. CALL-PUT SPREAD NARROWS, MARGINS EYED On the options front, the spread between the 25-day implied volatility of COMEX gold and that of put options has narrowed since Monday, a sign that gold option investors were turning bearish. src: http://www.reuters.com/article/2011/08/24/markets-precious-idUSL5E7JO1BP20110824
Hmmm? Anyone else thinking that they'll do the complete opposite of what these analysts are suggesting?
Dunno - but this correction was fairly obvious from a technical perspective - when my untrained eye can see a parabola and the POG is $300 over the 50 day moving average... it's bound to snap back. Just hope it doesn't take 6 months to reach the previous highs though - that's what happened last time.
Fairly obvious ? thats an understatement !!! yours wasnt the only untrained eye that could see it . If i was at home there would have been a little sale going on for some lunch money
Yep reno, your not the only fool who could see this was on the cards - and I count myself as a fool too.
I think the CME may have helped http://www.zerohedge.com/news/and-t...lanation-cme-hikes-gold-margins-again-time-27 also with regards to the Fed if more stimulas happens it is a long term positive for gold. The reason people are shedding gold IMO is to get in early on a stock market rally thinking QE3 is a definite.
Then buy some now and buy some later. Spread your purchase, mitigate risky bumps. Don't try to call tops or bottoms, too difficult.
"Spread your purchase, mitigate risky bumps. Don't try to call tops or bottoms, too difficult." Yep, and never lose sight of the real goal, to prepare yourself for the SHTF Day, and after. When that happens a dollar here and a dollar there will be meaningless. Speculators/traders/gamblers can ignore the above. OC
I'm no where near my oz goal on gold or silver! (chanting while doing some sort of American Indian rain dance) Down! Down! Down! Down! In a similar rhythm to kids in a school yard chanting Fight! Down! Down! Down! Down!
Damn, wanted to buy on this dip / pullback. Lines are back to 2 hours at ABC. Whats with all the sheep suddenly wanting to buy at lunch time =D. Guess, I'll wait until next week and pick up a dragon instead elsewhere. Slam
