Precious metals ‘shot to pieces’ as losses continue to mount

Gold failed to capitalize on the stock market rout and December futures tumbled 4% or $74/oz to $1,734/oz by early Thursday afternoon as the Fed warned of “significant downside risks” and pessimistic economic data from China further damaged sentiment.

Silver was hardest hit and platinum and palladium prices came under pressure as well. December silver slid -9.8% or almost $4 to $36.50 an ounce while October platinum lost -4.9% or $87 to hover just above the $1,700/oz level. Palladium for December delivery traded down -8.1% to $655.05 an ounce.

The iShares Silver Trust ETF fell 8.2% and the SPDR Gold Trust ETF GLD fell 2.6%, while November gold futures slipped a more sharp 3.9%.

MarketWatch quotes Matt Zeman, head trader and strategist at Kingsview Financial in Chicago: “You’ve got liquidation, people are going into cash and Treasurys. Fear is dictating the gold market.”

Reuters quotes Peter Hillyard, ANZ head of metal sales in Europe: “The textbook ideas, the things we follow, the things we believe to be so are being shot to pieces for the moment and it’s very difficult to trade other than for a long-term view.”

Bloomberg quotes Lv Xiaowei, an analyst at First Futures Co: “If the global economy continues to deteriorate, there will come a point where we’ll see both gold and the dollar going higher together as people look for least risky assets.”

Base metals were not spared and the December copper contract fell 30 cents, or 8%, at $3.46 a pound – down from $4.15 a pound just two weeks ago.