Gold, other Precious Metals Tumble – 1/20/2010

by Bullion Prices Staff on January 20, 2010

Gold and other precious metals fell on Wednesday as the dollar surged over concerns of China tightened bank lending. According to other reports, that same worry was cited for pulling down US stocks and crude oil. By the end of the day, gold fell 2.4%, silver plummeted 4.9% and platinum declined 1.3%.

New York bullion prices follow:

  • Gold for February delivery declined $27.40 to close at $1,112.60 an ounce. It ranged from $1,141.70 to $1,106.80.

  • Silver for March delivery plunged 92 cents to finish at $17.880 an ounce. It ranged from $18.870 to $17.805.

  • April platinum lost $21.80 to end at $1,617.60 an ounce. It ranged from $1,654.00 to $1,585.10.

In PM London bullion prices, the benchmark gold price was fixed earlier to $1,120.25 an ounce, which was down $12.75 from Tuesday. Silver fell 2 cents to $18.480 an ounce. Platinum was settled at $1,627.00 an ounce for a gain of $6.00.

"Gold is on the defensive because the dollar is rallying" Marty McNeill, a trader at R.F. Lafferty Inc. in New York, said on Bloomberg. "The dollar is the key."

"Even if gold goes to a one- or two-day market correction, there is still a lot of pent-up demand in gold. People are going to look at these dips as buying opportunities," Adam Klopfenstein, senior market strategist at Lind-Waldock in Chicago, said on Reuters.

"During the morning hours, a surge in the US currency and a steep fall in the euro pressured gold bullion heavily, and the metal was unable to overcome the dollar’s gains," wrote Jon Nadler, senior analyst at Kitco Metals, Inc. "As a result of the Chinese news reports that some local banks have already been told by the Chinese government to stop lending or suffer penalties, most commodities and some emerging market equities declined."

New York crude-oil for February delivery fell $1.40, or 1.8%, to $77.62 a barrel. Gold, considered a hedge during times of high inflation and economic uncertainty, tends to follow oil and move opposite to the U.S. dollar. A rising greenback makes dollar-denominated commodities, like bullion, more expensive for holders of other world currencies.

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