Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold tumbled 2.2% to close at a three-month low after a massive sell-order on the New York futures market set off a wave of technical selling. One large institutional trader dumped 800,000 ounces of paper gold early this morning, triggering a cascade of automated stop-loss selling that liquidated nearly two million ounces in a matter of minutes, causing Comex to suspend trading for ten seconds. Once the gold price crossed key support at $1,275, it plunged as low as $1, 260 before firming up to close above $1,268 for a weekly loss of 3.2%

Gold's safe-haven sentiment was further weakened by optimism that Congress might find a way to end the government shutdown and raise the debt ceiling. House Republicans offered a new plan to President Obama that would avert a default as part of a framework of spending cuts. The viability of the plan is uncertain, however, since the Administration has refused to negotiate under threat of what it sees as extortion. Nonetheless, risk appetite rose on the news, strengthening the dollar and driving the Dow and Global Dow higher by more than 0.7%. The other precious metals were mixed. Silver fell 2.9% and platinum lost 1.5% while palladium gained 1.1%

At the Comex close: December gold tumbled $28.70 to $1,268.20; December silver plunged 64 cents to $21.26; January platinum lost $20.40 to $1,375.60; and December palladium picked up 75 cents to $713.30.