Gold futures on the COMEX Division of the New York Mercantile Exchange further slumped on Friday, as the continued massive sell-off in global markets prompted investors to sell metals positions to raise cash. The surging dollar also put a sledge hammer in the precious metal.
The most active gold contract for Dec. delivery crashed 101.9 dollars, or 5.9 percent, to 1,639.8 dollars per ounce.
Gold lost 3.7 percent in the previous session, after the U.S. Federal Reserve said on Wednesday it will replace 400 billion dollars of short-term debt with longer-term Treasuries, saying that it sees "significant downside risks" to growth.
But many market analysts showed their disappointment in the Fed' s 'Operation Twist', saying the plan was insufficient and spurred investors to dump stocks, commodities and other assets perceived as riskier while flock for cash and treasuries.
A trader mentioned that the liquidation in gold is occurring parallel to liquidation in stocks, the recent major downward move in equities causes traders to sell gold in order to raise cash and meet margin calls on other positions.
"The continued lack of confidence regarding the world's economic climate has tanked the world stock markets. Once again there is the strong hint of a Quantitative Easing 3 and a reluctance to raise rates," said Mike Daly, a gold specialist with PFGbest here in Chicago.
Daly pointed out that the euro zone's inability to right their financial ship is lending strong support for the U.S dollar. Since gold and the U.S dollar generally trade inversely, the dollar surge has certainly fueled the mammoth sell-off in the precious metals.
Silver for Dec. delivery slumped 6.477 dollars, or 17.7 percent, to 30.101 dollars per ounce. Platinum for Oct. delivery crashed 97. 4 dollars, or 5.7 percent, to 1,613.2 dollars per ounce.
