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Gold falls after entering bear market territory

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Investing.com - After plunging 5.25% during Friday's U.S. session, gold futures are extending those losses to start the week in Asia as traders continue to punish the yellow metal after it entered bear market territory.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery fell 0.62% to USD1,492.15 per troy ounce in Asian trading Monday. Gold prices were likely to find near-term support at USD1,478.05 a troy ounce, the low from July 1, 2011 and resistance at USD1,516.80.

After violating key support levels at USD1,535 per ounce and then again at USD1,520, golds losses accelerated as stop-loss orders were triggered. The selling pressure only intensified as traders realized gold had entered bear market territory.

Gold prices have tumbled nearly 23% since hitting an all-time high of USD1,920.80 an ounce in September 2011, meeting the standard for a bear market.

Gold came under pressure last week after it was revealed in the latest meeting minutes from the Federal Open Market Committee that some members of the Federal Reserve favor winding down or bring an end to the Fed's monetary easing efforts this year. The Fed's quantitative easing programs have been viewed as supportive of gold on the basis that easing weakens the U.S. dollar, but in recent months, the dollar has gained strength. Gold is denominated in U.S. dollars.

Sellers also hit gold after Goldman Sachs slashed its three-month gold price forecast to USD1,530 per ounce from a previous estimate of USD1,615 per ounce.

Goldman also pared its 12-month price forecast to USD1,390 from USD1,550, citing the weakening safe haven appeal of the precious metal.

Meanwhile, Comex silver for May delivery slid 1.44% USD25.932 per ounce while copper for May delivery rose 0.48% to USD3.350 per ounce.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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