Gold drops further on profit-taking

08:32, April 13, 2011      

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Gold futures on the COMEX Division of the New York Mercantile Exchange tumbled 1 percent on Tuesday, dented by continuous profit-taking after a string of record highs reached by the precious metal last week, as well as a slump in crude oil price and the stock market.

The most active gold contract for June delivery fell 14.5 dollars, or 1 percent, to 1,453.6 dollars per ounce.

The crude oil price suffered a major setback after the International Monetary Fund (IMF) slashed its growth estimates for Japan and the United States, which renewed doubts about oil demand and the strength of global recovery, and also indicated that the recent spike in price has undercut demand.

A trader mentioned that the slump in the crude oil price is considered quite detrimental to the precious metal, as investors preferred gold as a hedge against inflation.

Meanwhile, the profit-taking that started in the previous session continued to take wind out of gold's sail, as the bullion knocked another all-time high on Monday.

Many analysts mentioned that they still have faith in the medium to long term outlook of the precious metal, as the demand for gold will remain intact, as long as turmoil all across the Mideast region continues. Meanwhile, the bargain-hunting from Asian jewelers and speculators will also offer a strong lift to the bullion when gold price loses steam.

May silver lost 54.6 cents, or 1.3 percent, to 40.066 dollars per ounce. July platinum fell 18.5 dollars, or 1 percent, to 1,774. 3 dollars per ounce.

Source: Xinhua
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