jw PRECIOUS-Gold sinks as government shutdown fails to trigger rally
(Adds trader comment, second byline, dateline, updates market activity) NEW YORK/LONDON, Oct 1 (Reuters) - Gold prices sank 3 percent on Tuesday, with stop-loss orders helping send the safe-haven metal to its lowest level in almost two months, as investors sold amid frustration that the U.S. government shutdown failed to spark a rally. Gold, silver, copper and crude oil all fell particularly hard in strong volume on U.S. markets. Gold futures prices dropped $25, or 2 percent, to an intraday low of $1,284 an ounce in just 10 minutes between 8:30 and 8:40 a.m. EDT as selling accelerated after prices fell below key support at $1,310 and $1,300 an ounce. A fifth of the day's volume so far changed hands in that 10 minutes. The U.S. government partially shut down for the first time in 17 years on Tuesday in a standoff between President Barack Obama and congressional Republicans over healthcare reforms.
Traders reported market talk about forced liquidation by a distressed commodities fund and selling related to rebalancing "It's obvious it has to be a fund that is just now forced into liquidation," said Jonathan Jossen, a Comex gold options floor trader. Jossen said selling related to huge bearish bets in December put options might have also pressured gold futures. Spot gold fell 2.7 percent to $1,291.36 by 11:28 a.m. EDT (1528 GMT), having hitting $1,283.54, lowest since Aug. 8. U.S. Comex gold futures for December were down $35.30 at $1,291.70. The dollar was also under pressure, while U.S. equities showed some resilience to the government shutdown. Investors fear a prolonged closure could derail the U.S. economy's tentative recovery. Prices at 11:28 a.m. EDT (1528 GMT)
LAST NET PCT YTD CHG CHG CHG US gold 1291.70 -35.30 -2.7% -22.9% US silver 20.790 -0.009 -4.2% -31.2% US platinum 1374.60 -33.50 -2.4% -10.7% US palladium 715.90 -11.25 -1.6% 1.8% Gold 1291.36 -35.58 -2.7% -22.9% Silver 20.74 -0.87 -4.2% -31.6% Platinum 1375.74 -23.06 -1.6% -10.5% Palladium 713.00 -8.50 -1.2% 1.6% Gold Fix 1290.75 -41.50 -3.1% -22.4% Silver Fix 21.70 2.00 0.1% -27.5% Platinum Fix 1377.00 30.00 2.1% -9.6% Palladium Fix 719.00 7.00 1.0% 2.9%
(Additional reporting by A. Ananthalakshmi in Singapore, Silvia Antonioli and Veronica Brown in London; editing by James Jukwey)