Gold teeters near five-year low after 'bear raid,' braced for more losses
By Marcy Nicholson and Clara Denina
NEW YORK/LONDON (Reuters) - Gold edged higher on Tuesday, the day after it took its deepest dive in years and hit five-year lows, with many dealers bracing for more losses on expectations for a rise in U.S. interest rates and subdued demand from India.
In what traders called a "bear raid," sellers on Monday dumped an estimated 33 tonnes of gold in just two minutes on exchanges in Shanghai and New York, sending prices on a nearly $50 downward spiral from which they never fully recovered.
On Tuesday, spot gold XAU= was up 0.2 percent at $1,098.58 per ounce at 3:00 p.m. EDT, but traders remained uneasy due to another day of unusually large trading volumes in China, where many suspect the selling spree originated.
After sliding on Monday by more than 3 percent, the biggest one-day loss since September 2013, bullion is trading around the critical $1,100 an ounce support level. Another breach of that could lead to a further selloff, some analysts said.
U.S. August gold futures GCcv1 settled down 0.3 percent at $1,103.50 an ounce, their weakest settlement since February 2010.
A slide in the U.S. dollar and stock markets, coupled with gains for silver and palladium prices, may be giving gold bears "some pause for concern" on Tuesday, said analyst James Steel of HSBC in New York. Silver XAG= gained 1.1 percent, and palladium XPD= rose 3.4 percent, erasing Monday's losses.
"That implies this is not a bullion-wide selloff," Steel said.
But many feared more losses after Monday morning's wave of selling hit markets shortly after the Shanghai Gold Exchange opened. Continued...