Buoyed by new recession fears, the soaring dollar trampled gold Thursday, pushing the spot price of the precious metal to its lowest point in more than a month.
A day after the Federal Reserve announced plans to swap $400 billion of short-term government debt for longer-maturity U.S. Treasury bonds, disappointed investors kicked the Dow Jones down more than 400 points.
“There’s a meltdown in stocks; the Fed came up short,” said Marin Aleksov, chief executive of precious metals broker Rosland Capital in Santa Monica. “People are scrambling to get cash to cover their position. It’s driven by emotions and uncertainty at this point.”
Added James Steel, chief commodities analyst for HSBC: “Normally, declines in equity markets would be good for gold. But there’s a twist to it today because the declines globally are so severe.”
Commodities slid as the dollar hit its highest point since February. Gold sank to around $1,740 an ounce after edging toward $2,000 last month. Palladium was around $656, its lowest level in nearly a year. Silver swung down more than 8%.
The ThomsonReuters/Jefferies CRB index of 19 major commodities was down 4.4% at midday, the biggest drop since May 5.
The Fed’s warning that there were “significant downside risks to the economic outlook” sparked more concerns. Especially for metals with industrial uses such as silver, platinum and palladium, a slowing economy signals less manufacturing demand to many investors.
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