Gold Prices Again Drop from 2010 Highs – May 4, 2010

by Bullion Prices Staff on May 4, 2010

U.S. gold futures fell on Tuesday, dropping from early day price highs which had not been seen since Dec. 4. A stronger dollar, falling oil prices and profit taking were three often cited reasons for the declines.

"A surging U.S. dollar index and sharply lower crude oil prices put some downside price pressure on the gold," wrote Jim Wyckoff of Kitco News. "Profit-taking pressure from recent price gains in the precious yellow metal was featured Tuesday. However, no significant chart damage was inflicted in gold."

In New York precious metals prices, June gold fell $14.10, or 1.2%, to $1,169.20 an ounce. Gold’s low price of the day was $1,166.90. Its high, which was last seen on Dec. 4, was $1,192.80.

"Gold’s (varied) roles as a commodity, an alternative currency and a safe-haven asset are pulling more in the same direction than they have all year," UBS said in a note cited on Reuters. "We would look for a test of December’s record high of $1,226.44 so long as the threat of sovereign aftershocks in the euro zone persists."

In white metals, July silver closed to $17.842 an ounce, tumbling 99.8 cents, or 5.3%. July platinum declined $43.10, or 2.5%, to finish at $1,685.80 an ounce. Palladium was hit the worst. The June contract ended at $515.25 an ounce for a loss of $33.00, or 6.0%.

In London bullion prices, the afternoon gold fix was $1,185.00 an ounce for an increase of $5.75, or 0.5%. Silver was up 9 cents — also 0.5% — to $18.710 an ounce. Platinum settled down $26.00, or 1.5%, to $1,712.00 an ounce. Palladium lost $23.00, or 4.2%, to $529.00 an ounce.

"Here in the U.S., the stronger dollar makes you sell gold," Frank Lesh, a trader for FuturePath Trading LLC in Chicago, said on Bloomberg. "Europe bids gold up and the U.S. sells it. The dollar is a bit of a safe haven, too."

New York oil for June delivery ended down 4% to $82.74 a barrel. Gold historically follows oil and move opposite to the U.S. dollar.

In a coin item today, newly released 2010 American Gold Buffalo Bullion Coins have been selling well. They were released on Thursday, and 48,500 were ordered. That is 15.0% of all the bullion Buffalos sold in their inaugural 2006 year, 29.0% of those in 2007, 28.2% of 2008 and 24.3% of 2009.

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