Gold tumbles, losses build moving into U.S. open

MADRID — Gold futures took a tumble in electronic trading on Wednesday, with prices dropping below the key $1,600-an-ounce level as markets awaited a hefty data calendar from the U.S.

Gold for delivery in April GCJ3 -0.73% fell $14.20 to $1,589.50 an ounce in electronic trading in the middle of Europe’s day.

Reuters

The precious metal fell $5.30, or 0.3%, to settle at $1,604.20 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday for its fourth straight loss, although it managed to hold above $1,600 through the trading session.

HSBC metal analysts said that gold’s fall on Tuesday came as U.S. stock indexes headed back to all-time highs.

“Besides a shift in investor preference towards risk assets over gold, uncertainty surrounding the Federal Open Market Committee’s quantitative-easing program may have also added pressure to bullion,” the analysts said.

The Fed’s FOMC will release the minutes of its Jan. 29-30 meeting later Wednesday, and the HSBC analysts said that gold may see more downside if the minutes show the central bank continued a discussion from its December meeting over whether quantitative easing may either slow or stop well before the end of 2013.

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“Bullion may face further pressure should the Fed reinforce their earlier statement towards quantitative easing, in our view. We see gold as likely to face further near-term pressure until physical bullion buying from Asia improves,” the analysts said. Read: Could China ride to gold’s rescue this week?

Among other metals futures, March silverSIH3 -0.89% fell 42 cents, or 1.4%, to $29 an ounce, while March copperHGH3 -0.22% fell 2 cents to $3.63 a pound.

Platinum for delivery in April PLJ3 +0.26% also saw prices fall sharply as gold prices fell, down $41.80, or 2.5%, to $1,655.370 an ounce, while March palladium PAH3 -1.12% fell $11.50 to $754.15 an ounce.

“PGM [platinum group metals] demand may be curbed on reports of lower auto sales in the euro zone,” the HSBC analysts said.

“Automobiles in the euro zone tend to be diesel-fired vehicles which have heavier platinum loadings relative to palladium, when compared with gasoline-fired vehicles. As such, lower European auto demand weighs on platinum more than it does for palladium, in our view,” they said. (MarketWatch)