Piggybacking on gold's slump were silver futures, which plunged to their lowest value since the middle of August of last year. Losses to gold on Tuesday dragged down the metal to its lowest value since the middle of last month.
Gold was barreling toward its sharpest loss during one trading session since February 20, when it hemorrhaged 2.6 percent of its value.
"You have a rally in equities and strength in the dollar and that seems to be the focus right now, which is putting gold in the back seat," analyst Howard Wen with HSBC told the news source on Tuesday. "It has been the case since the start of the year where you mostly have risk-on sentiment, while concerns about Cyprus, which is positive for gold, seem to have eased."
Upward climb forecast
Despite the rough waters over which they presently are navigating, the precious metals are poised to greatly benefit because of the shaky financial and economic situation in the euro zone, according to senior broker Kurt Pfafflin with Daniel's Trading.
"With a number of EU countries on the list of next dominoes to potentially fall (or eventually fail), one would think that those bank depositors residing in countries like Slovenia, Greece, Portugal, Italy, Spain would be taking highly proactive, immediate measures to protect and preserve their capital," the senior broker wrote earlier this week.
He called attention to an insouciance, which he said is troubling and quite possibly could be the lull before the storm.
"However, for the moment it appears those depositors may be doing nothing while comforting themselves with the thought that it couldn't happen to them because it's only little Cyprus and it was probably all Russian mafia money anyway."
He noted that the development has the characteristics of "what can only be construed as yet another extremely bullish fundamental development as to the role gold and silver will ultimately play as the world's only historically-proven reserve currencies and stores of value."
Yet one investment house is monitoring the progressively strengthening circumstances of the world's largest economy.
'The perfect storm'
Bloomberg reports Societe Generale notes the yellowish metal, following its sharpest annual gain in more than 90 years, is set to embark on a steady decline.
The U.S. economy growing stronger, the likelihood of borrowing costs being slashed and demand for gold tapering are likely to occur, analysts with the investment house stated in a Tuesday report.
Thus far this year, following the completion in 2012 of 12 consecutive years of annual gains, gold futures have lost roughly 4.6 percent of their value. Should the yellowish metal continue slipping and its losses amount to an additional 4.8 percent, the precious metal then would enter into what is generally considered to be a bear market.
Goldman Sachs indicated earlier this year that the yellowish metal is set to slump while the Credit Suisse Group noted that prospects are low about gold returning anytime soon to their record price of $1,923.70 per troy ounce, as established in September 2011.
"The gold price is, in our view, in bubble territory," the Societe Generale report states. "Rising interest rates, driven in part by a positive view of the U.S. economy with an associated improvement in the dollar, could be the perfect storm to start a longer-term bear market."
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