NEW YORK – Gold prices tumbled to a one-month low Thursday, plunging after the dollar gained some muscle against the euro and hedge funds cashed in profits following the metal’s record-setting rally above $1,000.
Gold had staged a phenomenal run before this week’s decline, gaining nearly 20 percent this year as investors snapped up the metal traditionally seen as a safe haven during economic uncertainty and rising inflation.
Gold began losing steam after Tuesday’s lower-than-expected Federal Reserve interest rate cut propped up the dollar, sparking a huge commodities sell-off of everything from copper to crude oil to grains.
“People are reducing positions. It may be a quarter-end phenomenon, it may be a scaling back for leverage, but the bottom line is people are selling stuff, and gold and commodities are getting slaughtered,” said John Reade, analyst with UBS AG in London.
Gold for April delivery lost $25.30 to settle at $920 an ounce on the New York Mercantile Exchange, after earlier falling as low as $904.70 – its lowest level since Feb. 19. On Wednesday, gold dropped 5.9 percent, its biggest one-day loss in nearly two years and almost $100 less than its all-time high of $1,033.90, reached on Monday.
“The dollar has been firming up and there’s a lot of profit-taking,” said Scott Meyers, analyst with Pioneer Futures in New York. “If you couple that with falling oil and grain prices, it’s a perfect recipe for a weak precious metals market.”
The steep rise in precious metals has led consumers to pay higher prices for gold earrings, bracelets and other jewelry.