finished sharply lower in heavy turnover after hitting a 10-day
low on Monday as losses in global stocks combined with a rising
dollar and weaker crude prompted bullion investors to lock in
profits. "Today's losses began with total asset liquidation that
began with the stock market weakness on Friday. Last night in
Asian hours we began to see the gold market lose value along
with crude oil's decline," said Carlos Perez-Santalla, a COMEX
floor trader of Hudson River Futures in New York. Most-active December gold (GCZ7: Quote, Profile, Research) on the COMEX division of
the New York Mercantile Exchange settled down $8.40 or 1.1
percent at $760.00 an ounce. It hit a session high of $772.80. Perez-Santalla also cited comments by U.S. Treasury
Secretary Henry Paulson affirming his strong dollar view, which
helped knock gold down further. [ID:nN19387133] The dollar rallied from session lows on Monday, climbing
from all-time lows on Monday as investors covered short
positions to pull back from risky bets. The Dow industrials (.DJI: Quote, Profile, Research) and S&P 500 (.SPX: Quote, Profile, Research) retraced early
losses and were little changed by midafternoon trade as
investors worried the credit market problems were having a
widening impact on the economy. On Friday, the Dow Jones industrials average lost 366 points
on the 20th anniversary of the 1987 market crash. In early electronic trade, December gold traded as low as
$749 an ounce, which marked the weakest level since Oct 11. Perez-Santalla said that gold futures' fall on Monday was
just a temporary pullback from a long-term move. "Until we break underneath the $725 level, the entire upside
move that we have seen since the beginning of September is still
intact," he said. Meanwhile, oil fell as much as $2 as financial markets
tumbled on growing concerns over the health of the U.S. economy,
triggering a correction from recent record highs. U.S. crude
(CLc1: Quote, Profile, Research) settled down $1.04 at $87.56 a barrel on Monday. The U.S. Commodity Futures Trading Commission said in its
latest Commitment of Traders report that speculative net longs
in COMEX gold rose 5.9 percent in the week to Oct. 16, after the
previous week's gain of 8.4 percent. [ID:nN19329151] Net longs in COMEX silver held by noncommercials climbed 2.3
percent. A week ago, they rose 6.2 percent. Trading was heavy on Monday. COMEX estimated final volume at
156,367 contracts, and gold options were estimated at 11,820
lots. Turnover in Chicago Board of Trade electronic 100-oz gold
futures was 39,563 lots at 2:51 p.m. EDT (1851 GMT)
http://www.cbot.com/cbot/pub/page. Market-watchers in the precious metals sector recently said
that gold could consolidate in the near term because of its
sharp gains and the build-up of speculative long positions. They
said that the gold market would not be immune if there was a
correction in global markets. John Reade, head of precious metals strategy of UBS in
London, told clients in a note that speculative longs on U.S.
futures markets hit another all-time high as of last Tuesday. "The weight of these positions explains why we are concerned
about the potential for a correction in gold in the near term,"
Reade said. In addition, Reade said that if risk aversion continued to
increase, it would probably trigger more losses in gold,
especially if it prompted unwinding in foreign-exchange carry
trades. At 2:15 p.m., spot bullion
$752.90/753.70, compared with the Friday New York close at
$765.30/766.10. London bullion dealers fixed the afternoon spot
reference price at $751.25. COMEX December silver (SIZ7: Quote, Profile, Research) closed down 8.0 cents at
$13.555 an ounce, trading between $13.325 and $13.670. Spot silver
lower than Friday's late New York quote of $13.52/13.57. London
silver was fixed at $13.35. NYMEX January platinum (PLF8: Quote, Profile, Research) fell $8.80 to end at $1,439.80
an ounce. Spot platinum
to $365.15 an ounce. Spot palladium
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