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Gold Plunges To Close At 12-week Low

4/4/2012 2:21 PM ET

Gold futures plunged over 3.5 percent to close at a 12-week low Wednesday, as commodities took a hit after the Fed Reserve meeting minutes revealed no mention of further monetary stimulus. Meanwhile, the dollar made smart gains against a basket of major currencies which also includes the euro.

Gold for June delivery, the most actively traded contract, dropped $57.9 or 3.5 percent to close at $1,614.10 an ounce Wednesday on the Comex division of the New York Mercantile Exchange.

Gold traded at an intraday high of $1,649.50 an ounce and a low of $1614.00 an ounce.

The dollar made gains against the euro after the Spanish bond auction saw lukewarm response with higher yields, again bringing back concerns of the eurozone sovereign debt problems.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.830 on Wednesday, up from 79.410 in North American trade late Tuesday. The dollar scaled a high of 79.92 intraday, with a low of 79.39.

The euro was trading lower against the dollar at $1.3129 on Wednesday, as compared to $1.3231 late Tuesday. The euro had scaled a high of $1.3239 intraday with a low of $1.3108.

There were some encouraging economic data with employment in the U.S. private sector showing continued growth for March. Eurozone retail sales declined at a slower pace, while Germany's factory orders grew marginally month-on-month in February. Elsewhere, a bond auction by Spain today witnessed lukewarm response.

From the U.S., the ADP said employment increased by 209,000 jobs in February following an upwardly revised increase of 230,000 jobs in February. Economists expected an increase of about 208,000 jobs compared to the addition of 216,000 jobs originally reported for the previous month.

Elsewhere, the European Central Bank left its key interest rate unchanged at 0.25 percent for a fourth month in a row in April, as widely expected. The central bank had reduced the rate in November and December, reversing the two hikes undertaken earlier last year.

Euro zone retail sales declined in February, but at a slower-than-expected pace, data from Eurostat showed. Retail sales fell 0.1 percent month-on-month in February, following a 1.1 percent rise in January. Economists were expecting sales to dip 0.2 percent.

Meanwhile, Germany's factory orders grew 0.3 percent month-on-month in February, reversing January's 1.8 percent decline, the Federal Ministry of Economy and Technology showed. The expansion was much smaller than the 1.5 percent consensus forecast. On a yearly basis, industrial orders fell by adjusted 6.1 percent, following a 6 percent drop in the previous month. Economists were expecting 5.5 percent decrease.

by RTT Staff Writer

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