Gold melts away, jinxed again at the $1,000 level

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Gold’s true believers are being tortured yet again, as the metal continues to pull back further from the $1,000-an-ounce mark.

Near-term gold futures tumbled $26.10 to $912.90 in New York on Tuesday, the seventh straight decline.

The metal has been sliding since it closed at $1,001.80 an ounce Feb. 20, which was the first close above the one-grand level since last March.

Now, as then, $1,000 has become a hard ceiling for gold. When the price just slipped past that level Feb. 20, rather than blasting through it, gold bulls lost heart, said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago.

The $1,000 mark ‘is a big, round number, and we see that there were a lot of willing sellers at that level,’ he said.

Two other factors also have been pushing gold lower over the last week. One is another rally in the dollar, as global investors have run back to the U.S. currency for safety amid the latest meltdown in stock prices worldwide. The dollar is gold’s traditional nemesis.

The other factor: reports that gold import demand has dived in India, usually the world’s biggest market for gold jewelry. There, as in the U.S., high prices have encouraged people to trade in old gold for cash, boosting supplies to feed still-robust investor demand for new bullion coins such as the American Eagle.

Bart Melek, a commodities strategist at BMO Capital Markets in Toronto, says he’s a long-term bull on gold. But in the short term the metal could be headed back to $850 an ounce, he said.

‘There’s quite a bit of profit-taking at this point,’ Melek said. Sellers may include hedge funds and other big players that are raising cash from one of their few winning trades this year, as gold has rallied from $808 an ounce in mid-January.

Silver, too, is getting hammered: Near-term silver futures plunged 35.5 cents to $12.69 an ounce on Tuesday. The price had reached $14.48 on Feb. 20.

-- Tom Petruno