NEW YORK - Gold prices tumbled to a one-month low Thursday, plunging after the dollar gained some muscle against the euro and hedge funds cashed in profits following the metal's record-setting surge above $1,000.
Gold drops like lead balloon as traders shun commodities
Gold had staged a phenomenal run before this week's decline, gaining nearly 20 percent this year as investors snapped up the metal traditionally seen as a safe haven during economic uncertainty and rising inflation. Gold began losing steam after Tuesday's lower-than-expected Federal Reserve interest rate cut propped up the dollar, sparking a huge commodities sell-off from everything to copper to crude oil to grains.
"People are reducing positions. It may be a quarter-end phenomenon, it may be a scaling back for leverage, but the bottom line is, people are selling stuff, and gold and commodities are getting slaughtered," said John Reade, analyst with UBS AG in London.
Gold for April delivery lost $25.30 to settle at $920 an ounce on the New York Mercantile Exchange, after earlier falling as low as $904.70 -- its lowest level since Feb. 19. On Wednesday, gold dropped 5.9 percent, its biggest one-day loss in nearly two years and almost $100 less than its all-time high of $1,033.90, reached on Monday.
The dollar strengthened versus the 15-nation euro Thursday, and oil fell below $100 for the first time in two weeks.
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