Gold price fell below the level of US$ 1600 per troy ounce. The strengthening of U.S. dollar to hold the demand of gold as an alternative investment assets.
Gold futures for February delivery trimmed 4.6 percent to the position of US$ 1586.90 per troy ounce on the Comex in New York. This is the lowest closing level since July 13. The same contract traded at U.S. $ 1581.80 per troy ounce at 7:03 pm Singapore time.
The U.S. dollar rose to its highest level in 11 months against the euro amid escalating problem of funding to overcome the crisis in Europe. While the Federal Reserve will keep the U.S. economy and restraint in taking new measures to boost the economy. There is turbulence in commodity markets because of the strengthening dollar.
A sharply decline in gold prices indicate a significant level of sales come from the hedge fund. There is a great risk-offs due to European and triggered investors looking for liquidity and sell everything that can be sold to limit the risk.
Gold has the potential to continue to move to a level of 1.550 U.S. dollars / ounce, after successfully penetrate the MA 200-day level. Gold may continue to weaken to as low as the end of 2008. It seems that market players still continue to open sell position. Spot gold fell more than 3% on Wednesday related to concerns about liquidity and the European economy. Spot gold was at $ 1,576.25 / oz.
Fitch has made investments downgrade in five major European banks by one notch. French Minister Alain Juppe said the downgrading of France is not too large. This prompted market speculation that the government was preparing to lose rank tripe-A.
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