Gold plummets as the dollar firms

By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- Gold prices plunged Thursday as the dollar surged against the euro amid concerns about the economic health of certain European nations.

February gold fell $28, or 2.5%, to settle at $1,107.40 an ounce after falling to a low of $1,098 an ounce earlier in the session. The retreat came two weeks after gold settled at an all-time high of $1,218.30 an ounce.

Click the chart for current gold prices.

Carlos Sanchez, a precious metals analyst at CPM Group in New York, said the selloff was "definitely attributable to the stronger dollar, and some stop-loss selling."

The dollar jumped 1.3% against the euro to $1.4346, its highest level since early September. The euro came under pressure after Standard & Poors downgraded Greece's credit rating, raising concerns about the health of other strained euro zone economies like Ireland.

A stronger dollar tends to weigh on the price of gold, since the precious metal is traded in U.S. dollars around the world.

The buck was also supported by a Wednesday statement from the Federal Reserve that said U.S. economic conditions continue to improve, even as the central bank held interest rates near historic lows.

Sanchez said a firm move below $1,100 an ounce could pave the way for a brief retreat toward a range near $1,050 an ounce. However, he expects the weakness to be short lived.

Gold, which has gained about 24% this year, has been on a tear over the last few months as the dollar has weakened substantially.

While the dollar has regained ground in recent days, many traders expect gold prices to push higher into next year amid strong investor interest and the outlook for low U.S. interest rates.

In a research report out Thursday, analysts at Morgan Stanley raised their forecast for gold prices next year by 20% to $1,200 an ounce. The investment bank also raised the outlook for 2011, but reduced forecasts from 2013 onwards.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.92%3.98%
15 yr fixed3.04%3.09%
5/1 ARM3.10%3.20%
30 yr refi3.93%4.06%
15 yr refi3.05%3.17%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,828.24 0.49 0.00%
Nasdaq 4,791.63 4.31 0.09%
S&P 500 2,067.56 -5.27 -0.25%
Treasuries 2.19 -0.04 -1.79%
Data as of 3:49am ET
Company Price Change % Change
Kinder Morgan Inc 41.35 -0.97 -2.29%
Halliburton Co 42.20 -5.14 -10.86%
General Electric Co 26.49 -0.38 -1.41%
Bank of America Corp... 17.04 -0.07 -0.41%
Apple Inc 118.93 -0.07 -0.06%
Data as of Nov 28

Sections

Union-backed demonstrators are protesting outside some Walmart stores Friday, asking the company to pay workers at least $15 an hour. More

From their smartphones, tablets or laptops -- and the comfort of the living room or Thanksgiving dinner table -- Black Friday shoppers could find deals all week that rivaled the in-store doorbusters. More

Natalie's Cakes and More has raised $84,000 through GoFundMe after protests trash store. More

Retailers are promising big deals this Black Friday, but are the savings actually worth the shopping mayhem? Test your deal-sniffing skills. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.