- Gold plunged 1.5% on Tuesday as risk-off assets suffered.
- U.S. services PMI improved more than expected in October, according to the Institute for Supply Management.
- U.S. dollar hits three-week high against a basket of currencies.
The price of gold plunged on Tuesday, wiping out more than a week’s worth of progress as keener appetite for risk assets undermined precious metals. Meanwhile, the U.S. services sector rose more than expected in October, allaying fears of recession for the world’s largest economy.
Gold Price Plunges; Silver Follows
Futures on December gold delivery, the most actively-traded derivatives contract, plunged $23.30, or 1.5%, to $1,487.80 a troy ounce on the Comex division of the New York Mercantile Exchange. The yellow metal is on track for the lowest settlement since Oct. 22.
Gold futures approach multi-week lows after failure to hold $1,500. | Chart: barchart.com
Silver futures also ripped lower, with the December contract falling 34 cents, or 1.9%, to $17.73 a troy ounce.
The gold-silver ratio that is used by investors to determine when to buy precious metals rose 0.6% to 84.02. That’s how many ounces of silver are needed to purchase one ounce of gold.
Precious metals sold off on Tuesday as the U.S. dollar strengthened to three-week highs against a basket of competitor currencies. The U.S. dollar index (DXY) jumped 0.5% to 97.96 for its second straight daily advance.
U.S. dollar index (DXY) extends recovery to two days. | Chart: Bloomberg
The greenback continues to trade well below the multi-year high set in early October.
Conventional wisdom states that a stronger dollar makes buying gold and silver more expensive for foreign buyers of futures contracts.