GO
Loading...

What's the Better Metal Right Now?

Gold fell to a six-month low on Wednesday, breaking through support at $1,600 an ounce, as investors were drawn to riskier assets ahead of a closely watched U.S. Federal Reserve minutes later in the day.

Signs of an improving global economic outlook sent equities to multi-year highs this week, making gold's safe-haven qualities less appealing.

Spot gold fell as low as $1,581.30 an ounce, down 1.4 percent. Having broken strong technical support at $1,600, the metal is now vulnerable to further losses, with the next downside target at $1,564, traders said.

U.S. gold futures were last down 1.3 percent at $1,584 per ounce. Euro-denominated gold fell as low as 1,189.86 euros an ounce.

"There is less money finding its way into the gold market," Tobias Merath, global head of commodity research at Credit Suisse, said.

"Fundamentals for gold haven't really changed, but other asset classes have now become more attractive, and that's leaving prices largely range-bound."

(Read More: Pro: Why Gold Is In Trouble)

Over the past few years, gold has become more dependent on investment flows, which now account for one third of global demand compared with just 10 percent a decade ago.

"The problem with this market structure is that prices (have) become a bit more dependent on investment sentiment, and if investors stop buying, prices fail to rally," Merath said.

Holdings of the SPDR Gold Trust, the world's top gold-backed exchange-traded fund, dropped by more than 3 tonnes from the previous session to 1,319.964 tons on Feb. 19, the lowest level in nearly five months.

(Read More: Masked Raiders Damage Greek Gold Mining Site)

European shares were mixed on Wednesday, consolidating after the previous session's sharp gains on weak earnings and caution ahead of the Fed minute. Earlier Asian shares reached multi-month highs as an improving global economic outlook whetted investor appetite for risk.

The S&P 500 index and Dow Jones Industrial Average hit their highest level in more than five years in the previous session. The S&P 500 has climbed more than 7 percent so far this year, compared with a 4 percent loss in spot gold.

The euro was firm against the dollar, still supported by Tuesday's data showing a strong improvement in German economic sentiment.

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

That said, we want to hear from you — What do you think is the best metal right now?

Vote now in our "Futures Now" poll!

Watch "Futures Now" Tuesdays & Thursdays 1p ET exclusively on FuturesNow.CNBC.com!

Like us on Facebook! Facebook.com/CNBCFuturesNow

Follow us on Twitter!@CNBCFuturesNow

Contact Futures Now

  • Showtimes

    Watch Futures Now Tuesdays & Thursdays 1p ET exclusively on cnbc.com!

Sponsor Links

  • CME Group brings buyers and sellers together through its CME Globex electronic trading platform and trading facilities in New York and Chicago.

  • Take your trading to the next level with a platform that lets you trade stocks, options, futures and forex all in one place with no platform or data with no trade minimums. Open an account with TD Ameritrade and get up to $600 cash.