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P.M. Kitco Roundup: Comex Gold On Defensive With Outside Markets

By Allen Sykora of Kitco News
Monday June 24, 2013 2:02 PM

(Kitco News) - U.S. gold futures were on the defensive Monday with a range of other markets on a continuation of some of the same factors that hurt prices last week – rising U.S. Treasury yields, a stronger dollar and uneasiness about the liquidity in the Chinese financial system.

“There was nothing new,” said Dave Meger, director of metals trading with Vision Financial Markets. “There was an additional sell-off in Asian markets and continuation of the concerns about the Chinese liquidity crunch. With the dollar up dramatically once again and bond yields moving higher, the same factors from the last several days apply once again today.”

As of 1:50 p.m. EDT, gold for August delivery was $11.90, or 1%, lower at $1,280.10 per ounce on the Comex division of the New York Mercantile Exchange. July silver was down 41.4 cents, or 2.1%, to $19.545 an ounce.

The Shanghai Composite stock index fell 5.3% Monday on concerns that officials may not act to ease a liquidity crunch, according to news reports. Equities also fell elsewhere in the Asia-Pacific region.

Meanwhile, the euro fell to $1.3113 from an overnight high of $1.3124. The 10-year Treasury yield continued its ascent, peaking at a high of 2.657% that was its strongest level since August 2011.

The dollar and yield have both risen since a Federal Open Market Committee meeting last week. While Fed Chairman Ben Bernanke emphasized that any tapering of the central bank’s bond-buying program, known as quantitative easing, would hinge on future economic data, he also outlined a possible scenario where this might begin yet this year and end next year, assuming the economy continues to improve. This has also spooked the stock market in recent sessions.

Zachary Oxman, portfolio manager at TrendMax Futures, described the weakness in the precious complex as part of an overall move in markets.

“If you look across the whole commodities complex, (nearly) everything else is down too,” he said. “Ag is down. Softs are down.” So were base metals. “It’s a big liquidation day across the board,” Oxman said. “There are a lot of worries about China.”

Further, the Dow Jones Industrial Average was around 143 points lower.

“The only thing firming is the dollar,” Oxman said. “There’s sort of a flight to cash.”

While August gold was softer, however, the contract did hold above the low of $1,268.70 late last week, making this a level traders will eye as potential near-term chart support. The session low was $1,275.10. July silver likewise held above Friday’s low of $19.31, trading no lower than $19.38 before the close of open-outcry trading.

By Allen Sykora of Kitco News; asykora@kitco.com

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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