Gold falls hard; silver falls harder

Gold prices plummeted Friday, at one point tumbling 15 percent from the level of three weeks ago, as investors started buying stocks and, to a lesser extent, euros but stayed kept selling precious metals.

The virtual collapse in the safe-haven investment – it hit a seven-week low and was headed towards its steepest weekly fall since late 2008 — started Wednesday when the Fed said it would lengthen the maturity of its balance sheet to suppress long-term interest rates.

In combination with a downbeat economic outlook the Fed issued in announcing “Operation Twist,” as the maturity change was dubbed, markets swooned, with stocks and precious metals plunging as investors fled to dollar assets like U.S. Treasuries.

Stocks began recovering Friday and the dollar gave up some of this week’s gains, but the damage has been done to precious metals.

Since Operation Twist, gold has fallen more than 9 percent, even dropping below $1,700 for the first time since Aug. 5. Silver is solidly in bear territory: Since Wednesday it has dropped 25.01 percent.

Some of the selling was large institutions booking profits ahead of the third quarter’s close; other selling stemmed from the need to raise cash to cover losses elsewhere; part of it was retail investors capitulating.

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Tags: Gold analysis, Gold future prices, Gold futures, Gold investment, Gold news, Gold price, Gold price forecast, gold prices, Silver price, silver prices

Posted by VBN on Sep 24 2011. Filed under Gold. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry