Gold Slumps Below $800

Gold fell below $800 a troy ounce for the first time this year on Friday as the recent sell-off in the commodities sector gathered pace and the dollar hit fresh highs., Bloomberg 8/15/2008 6:45:58 AM

Tumbling metals prices gave the dollar’s recent rally an added boost and helped the US currency reach the highest levels since February.

Spot gold fell 3.6 per cent to $776.90 a troy ounce, its first time below the $800 level since December, and 24.5 per cent below March’s record high of $1,030.80.

Silver’s declines have been even more pronounced. The precious metal fell 7.6 per cent on Friday to $13.06 an ounce, down 36 per cent from its March high of $21.24.

Meanwhile, platinum has sunk to a ten-month low, trading at $1,360 a troy ounce, and down 40.6 per cent since reaching a record $2,290 in March. Sentiment towards platinum, which is used in vehicle autocatalysts, has been hurt by a slump in car sales in the US.

Sentiment towards precious metals has been weakened by rising fears of the the global economy is heading for a recession. These fears were amplified by eurozone GDP for the second quarter, released on Thursday, which showed the economy shrinking for the first time since the creation of the single currency in 1999.

Meanwhile, the recent surge of the dollar has made commodities priced in the US currency more expensive to buy in other denominations such as the euro or sterling.

The decline for gold came amid slowing physical demand for jewellery after prices hit record levels above $900 an ounce. Second-quarter demand for the metal fell 19 per cent to 735.6 tonnes, according to figures from the industry-backed World Gold Council this week. This was led by a 24 per cent fall in demand for jewellery.