By Barani Krishnan
Investing.com - Gold has once again lost its $1,300 perch and palladium may not remain the world's costliest metal for long.
Bears that invaded precious metals markets in the previous session returned on Thursday to wreak more damage, pummeling prices across the sector.
Gold hit two-week lows, losing out to a dollar that proved a better hedge against Brexit and the U.S.-China trade war.
Palladium, a key material used in automobile pollution-control devices, struggled to stem the profit-taking and speculative selling. Until earlier this week, the metal had gained almost 30% in 2019 on fears of supply scarcity.
Spot gold, reflective of trades in bullion, was down $18.60, or 1.4%, at $1,291.16 per ounce by 3:15 PM ET (19:15 GMT). The session bottom was $1,288.64, the lowest spot gold had got to in three weeks.
Gold futures for June delivery, traded on the Comex division of the New York Mercantile Exchange, settled the official trading session down $21.60, or 1.6%, at $1,295.30 per ounce.
The dollar index, which measures the greenback against a basket of six currencies, was up 0.5% at 96.81, accelerating gold’s breakdown below the technically-important $1,300 handle and sparking technical selling as well.
"Gold bugs have been left frustrated because of the fact other major central banks have also turned dovish, thereby keeping the dollar supported indirectly as foreign currencies tumbled," said Fawad Razqzada, analyst for forex.com in London.
"Gold needs to reclaim that $1,300/$1,305 area first to repair some technical damage. However, more pain could be on the way should the most recent low of $1281 give way now," added Razaqzada.
The spot price of palladium was down $96.80, or 6.7%, to 1,351.50 per ounce. It fell almost as much on Wednesday, losing 6.5%. The session low on Thursday was $1,335.10, its lowest in two months. Last week, spot palladium hit record high of $1,616.30.
Palladium futuresfor June delivery, traded on Comex, settled the official trading session down $111.48, or 7.9%, at $1,309.70 per ounce. On Wednesday, it lost 6.2%. Since Monday, it's fallen 15.1%.
“Given the distance palladium had traveled since last year, this only just reflects a weak correction within a continuous strong uptrend,” Saxo Bank analyst Ole Hansen said.
“From a technical perspective, the next major level is $1,316,” Hansen added.
Some analysts and investors had warned that palladium had turned into a bubble asset after it contined to trump gold this year and become the world's costliest metal on worries of supply scarcity. That happened despite signs the auto industry will likely underperform this year amid a U.S. recession scare and potential slowdown of the Chinese to eurozone economies.
On Thursday, the silvery-white metal, used for purifying gasoline emissions, was just about $30 higher than gold, after trading around $300 higher just weeks ago.
Trades in other Comex metals as of 3:39 PM ET (19:39 GMT):
Platinum futures down $16.05, or 1.9%, at $845.95 per ounce.
Silver futures down 30 cents, or 2%, at $15 per ounce.
Copper futures up 2 cents, or 0.6%, at $2.88 per pound.