Gold Falls US$20

Submitted by Craig Strzelecki on 8 February, 2006 - 08:15

Gold

Gold declines in Value by $20: There were no fundamentals related to the selling of gold, but gold dropped in price by US$20 an ounce to below $US550 in its biggest one-day decline in two years. Technically there could be more selling ahead as the bears take hold of the market. Support may be found once frech buying from gold believers set in. The gold price movement has consequences on the forex markets with the USD/CAD and AUD/USD are easily influenced by gold movements. This may have been the reason for the recent falls in the AUD/USD foreign currency pair - which was also hit by the recent US non-farm payrolls data which sent it trending down.

"It is all fund liquidation, probably commodity-index related," said Tom Boustead, an analyst with Man Financial in New York, told Reuters. "This was a commodity flush-out."

For the resource-driven Australian sharemarket and the $A, a commodity flush-out was the last thing the bulls wanted to see. The Aussie currency broke key technical support to dip below US74¢, while the sharemarket's benchmark S&P/ASX-200 sank 60 points at the open, with resource leaders leading the way.

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