A sharp plunge in gold prices to a five-year low shook financial markets, but major currencies held up.
Gold fell as low as US$1,072 per ounce in Asia trade from around US$1,145 at the end of last week, before pulling up to US$1,097 late in the day on New York’s Comex board.
Traders said massive selling in China, where financial markets have been turbulent generally, was behind the drop.
Still, the key currency pairs were little changed. The US dollar was higher generally, but only by small amounts: it moved to US$1.084 against the euro, and to 124.30 yen. The euro, meanwhile, edged up to 134.55 yen.
Commodities have been in the receiving end of the bear blitz in recent weeks.
“Traders have been worried about the impact of the appreciating US dollar and falling confidence in China, with the world’s second-largest economy being a major consumer of gold, oil and iron ore among other basic materials.”
Gold held near its lowest level in more than five years early on Tuesday after tumbling more than 4 percent the session before in an early-Asia rout, pulling bullion below the key $1,100 support.
Monday’s selloff began shortly after the Shanghai Gold Exchange opened trading when liquidity was thin and investors are eyeing the bourse for any further selling pressure.
FUNDAMENTALS
* Spot gold was up 0.3 percent at $1,100 an ounce by 0026 GMT, after an early low of $1,096.65. The metal fell as far as $1,088.05 on Monday, its weakest since March 2010.
* U.S. gold for August delivery slipped 0.7 percent to $1,099 an ounce.
* A lack of liquidity hastened gold’s 4 percent slide in a matter of minutes on Monday after a record 3.3 million lots of the metal, or 33 tonnes, traded on a key Shanghai physical contract, as top consumer China appears to be shunning bullion.
* Investors have found less and less reason to hold bullion as a safe haven, with the dollar strengthening ahead of what is expected to be the first increase in U.S. interest rates for nearly a decade.
* Gold’s slide has helped wipe out half the gains from the last decade’s historic bull run, taking prices back to a key chart level and threatening a break towards $1,000 an ounce.
* CME Group Inc briefly halted trading in U.S. gold futures twice, 20 seconds each time, on Sunday evening as prices plunged.
* Bullion’s slide sent shares of big gold miners into freefall for a third straight trading day with Barrick Gold the worst hit and falling more than 10 percent on the New York Stock Exchange to the lowest levels since 1989.
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