Gold Price Tumbles, Chinese Data, Fed Spook Wall Street

The gold price tumbled $45.91, or 2.6%, to $1,736.44 Thursday amid significant weakness in financial markets across the globe.  Silver plunged alongside the price of gold, by $2.61, or 6.6%, to $37.01 per ounce.  U.S. markets were set to open with large losses, as S&P 500 futures dropped 30.00 points to 1,125.75.  In addition to disappointment stemming from yesterday’s Fed meeting, a weaker than expected report on the Chinese economy helped fuel the selling.  HSBC’s preliminary China Manufacturing Purchasing Managers’ Index, or “flash” PMI, slid to a two-month low of 49.2 in September, below the 50 level separating expansion from contraction.

On Wednesday the gold price turned sharply lower while the U.S. dollar rallied after the Federal Reserve announced plans to launch Operation Twist.  The spot price of gold climbed to as high as $1,817.80, but subsequently tumbled to an intra-day low of $1,778.00 following the Federal Open Market Committee (FOMC) announcement.  Silver followed the gold price lower, from $40.76 to $39.84 per ounce.  The U.S. Dollar Index (DXY) advanced 1.0% to 77.78, while the euro sunk 1.0% to 1.3570.

Gold equities headed south alongside the price of gold yesterday afternoon.  The AMEX Gold Bugs Index (HUI), which had been higher by as much as 2.1%, finished with a loss of 1.8% at 611.33.  Three of the HUI’s largest decliners were Kinross Gold (KGC), Newmont Mining (NEM), and Randgold Resources (GOLD) – which fell 3.4%, 3.2%, and 2.9%, respectively.