Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold tumbled 3.1% to $1,286, its lowest close in nearly two months, after a massive sell-order, apparently by a distressed commodity fund, triggered automatic selling that pushed the gold price $25 lower in a matter of minutes. Sentiment had already weakened after partial closure of the U.S. government failed to spark safe-haven demand, prompting traders to lock in profits from gold's 8% rally during the third quarter, which ended yesterday. Soon after the markets opened, the big sale tripped stop-losses, plunging gold through key support at $1,310 and $1,300 before it firmed up to find support above $1,285.

House Republicans forced a shutdown of many federal functions at midnight last night, throwing more than a million employees out of work, because the Senate would not agree to postpone the implementation of Obamacare for a year. Perceiving the shutdown as short-lived grandstanding, however, traders saw little increased need for safe-havens�something that may change if Congress also refuses to raise the debt ceiling by October 17, risking U.S. default. Equities rallied, with the S&P 500 adding 0.8% and the Nasdaq 1.2%, while the dollar and U.S. Treasury prices fell. Silver dropped 2.5% while sister metals platinum and palladium lost 1.9% and 1.8%, respectively.

At the Comex close: December gold tumbled $40.90 ounce to $1,286.10; December silver dropped 53 cents to $21.175; January platinum lost $27.10 to $1,385.30; and December palladium fell $8.25 to $718.90 an ounce.