Monday, 15 April 2013

Gold Bear Run Starts

Stretching into the third session of losses, the yellow metal seems to end its 12 year long bull run with the panic selling taking it down by as much as $179 an ounce in late trade on Monday to a fresh 27-month low.
Today, as well it opened down, trading at $ 1347 per ounce on the COMEX division of New York Mercantile Exchange. The gold price is down more than 18.7% this year and Friday's sharp decline dragged the metal it into official bear territory, defined as a 20% decline from a high.
U.S. stock indexes fell the most in five months Monday, swept up in a rush out of gold, oil and other commodities, after reports from China showed the industrial giant's growth had cooled. The Dow Jones Industrial Average ended near its lows of the day, down 265.86 points, or 1.8%, to 14,599.20. The S&P 500 index sank 36.49 points, or 2.3%, to 1,552.36. The Nasdaq Composite fell 78.46 points, or 2.4%, to 3,216.49.
Soured sentiment built as the session wore on, exacerbated by a drop in a gauge of U.S. home builders' confidence. Some strategists said the pullback was expected after stock indexes notched records last week.
CME Group Inc. said it will raise the collateral requirements for trading in benchmark gold, silver and other precious metals futures contracts, effective at the close of business Tuesday.
Margins to trade benchmark Comex 100-troy ounce gold futures will be increased by 19%, CME said in a notice emailed late Monday. The margin to trade silver will increase 18%, palladium will increase 14% and platinum will increase 19%. Natural-gas futures will increase 5.6%
Futures exchanges like CME keep tabs on market volatility as they determine how much collateral, or margin, traders must deposit to back up trades. When markets like gold begin to rapidly swing, exchanges may decide that customers need a bigger cushion to cover changes to their positions.
Gold hit a record $1,909 an ounce intra-day on 23 August 2011, but a the next day suffered one of few triple digit one-day losses when it plummeted $105, ending the week down more than 10% from the all-time high.
For 10 years the price of gold shot up, aided especially by the stock market meltdown of 2009. After hitting its high in August 2011, gold saw a gradual decline as the stock market rose into record territory. Then it plummeted 25% last week, indicating growing global economic weaknesses.
MCX June gold futures may open today's session near Rs 25400 levels with support around Rs 25100 levels.

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