Daily Gold Update

Source: MarketWatch

New York— Gold futures tumbled more than 3% on Monday, erasing their gain from the previous week, as a rebound in the U.S. dollar and a spike in global risk aversion fueled profit-taking in the precious metal. Other metals prices also posted sharp losses, with silver selling off 5%. Gold for December delivery dropped $27, or 3.2%, to end at $807.70 an ounce on the New York Mercantile Exchange. In after-hours, electronic trading, the selling intensified. December gold was last down $40.90, or 5%, at $793.80 an ounce on Nymex.

"You are seeing a huge sell-off trade in gold off the back of a massive carry trade unwind," said Zachary Oxman, a senior trader at Wisdom Financial. Carry trades refer to the practice of borrowing low-yielding currencies, such as the Japanese yen, to buy higher-yielding currencies. "Global risk aversion and fears of further write-downs from subprime losses this week, along with a 4% decline in China's market to start the week off, have all driven the metals and currency markets in a strong counter-trend fashion," Oxman said in emailed comments. See full story.