Gold prices opened to a rout overnight in Asia before recovering slightly in the early morning US trading period as a technical pressure brought fresh lows.
Gold for August delivery on the Comex division of the New York Mercantile Exchange fell $19.40 or 1.7 percent to $1,112.50 per ounce. Trade has ranged $1,080.00 to $1,132.50.
Overnight in Asia, prices shed roughly five percent of its value on the opening of markets. Traders sold off five tonnes of the precious metal, forcing the price down to $1,085 – the lowest since April 2010.
“While the market has managed to bounce back from the lows for now, the mood remains very nervous,” Joni Teves, an analyst at UBS, said. “It’s unclear what exactly triggered the move, although it seems that much of it was due to a combination of momentum and technical selling.”
However, the initial shock has worn-off and prices have recovered modestly, indicating an oversold market.
“The magnitude of the declines and the level of positioning suggest to us that the move is overdone and markets should recover from here,” Teves added.
The market remains significantly short – the latest CFTC data for the week ending July 14 showed that the net fund length dropped to 47.8k lots while gross shorts remain near record highs. Outflows also continued in ETF markets followed by FastMarkets. ETF holdings are now at their lowest level this year as of July 17 at 1,576 tonnes, down 11.52.
In the eurozone, Greece banks reopened today after three weeks of closure, but capital controls and restrictions remain in place for withdrawals. The Mediterranean country started its repayment to international creditors today after a third bailout programme was approved.
In data today, German PPI month-over-month in June was down 0.1 percent, below forecasts of a null change. EU current account in May was 18 billion, better than expectations of 23.1 billion.
Turning to wider markets, Germany’s DAX and France’s CAC-40 were up 0.9 percent and 0.7 percent respectively, while the euro was 0.1 percent stronger at 1.0846 against the dollar.
As for other precious metals, Comex silver for September delivery was down 15.9 cents $14.675 per ounce. Trade has ranged from $14.490 to $14.850.
Platinum for October delivery fell $17.70 to $983.60 per ounce, while the most actively traded palladium contract was at $608.20, down $10.80.
(Additional reporting by Ian Walker & Editing by Tom Jennemann)
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