NEW YORK/LONDON (Reuters) - Gold prices tumbled to a two-month low below $880 an ounce on Tuesday as a dollar rise and de-leveraging amid a U.S. stock rally triggered a heavy sell-off in all precious metals.
Gold XAU= hit a low of $872.90 and was at $884.20/885.4 an ounce at 2:15 p.m. EDT, against $916.20/917.00 late in New York on Monday, when it had fallen 2 percent.
The yellow metal has fallen about 15 percent since hitting a record high of $1,030.80 two weeks ago.
“Given the elevated level of speculative interest, we would not rule out a deepening of the current correction in prices,” said Suki Cooper, precious metals analyst at Barclays Capital.
“However, the overall environment for gold remains positive over the forthcoming months,” she said, adding the dollar was not expected to rise markedly against the euro in the short term, given the likelihood of poor U.S. economic data this week.
Jonathan Jossen, an independent floor trader in New York, said that gold was pummeled as funds were leaving all commodities in droves.
“We watched heavy fund selling in the futures all day yesterday. Nobody looked and said ‘OK, here is the bottom and let’s get back into the gold market,’” Jossen said.
Jossen also cited a negative gold lease rate last week, which signaled possible central bank selling.
The dollar gained broadly on a better-than-expected report on U.S. manufacturing activity for March.
In the first quarter, however, the dollar still registered its biggest quarterly loss versus the euro in four years.
A report on Tuesday showed U.S. factory activity contracted for a second straight month in March. The market was also waiting for Friday’s jobs figures, which are expected to show U.S. employers cut payrolls in March for the third straight month.
In industry news, Turkey’s gold bullion imports fell in March by 95 percent from February to their lowest-ever monthly figure of 675 kilograms (1,485 pounds).
Meanwhile, Italy also reported a sharp drop in gold jewelry
U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange settled down $33.70, or 3.7 percent, at $887.80 an ounce.
“Given gold’s recent movements, the yellow metal will remain vulnerable to selling pressure in the coming sessions, particularly as the second quarter is traditionally weaker than the first due to general market cycles,” James Moore, analyst at TheBullionDesk.com, said in a market report.
Platinum slipped to a one-week low of $1,888 an ounce and was at $1,918/1,928, against $2,005/2,025 in New York late on Monday. It has fallen more than 17 percent since hitting a record $2,290 on March 4 as a power crisis in top producer South Africa has hit output.
South Africa’s state power utility Eskom was near a deal to buy more electricity from Mozambique’s Cahora Bassa development to try to ease the problem, a Mozambican official said.
Silver had bottomed at $16.32 and was at $16.79/16.84 an ounce, the lowest since early February, down from $17.27/17.32 late in New York on Monday.
Palladium fell to $435/440 an ounce from its Monday close of $438/443.