US MIDDAY: gold plunges two percent

Gold fell 2 percent early on Thursday, set for its biggest one-day fall in more than a month, after a surprise increase in US jobless claims hit investor risk appetite and boosted the dollar, pummelling commodity and stock markets. Investors sold gold to cover steep losses in the equity, grains and crude oil markets, which sank on news of the release of emergency oil reserves.
Gold was already weakened on Wednesday after the Federal Reserve offered no hope for a more prolonged period of monetary support. Bullion broke below key technical support at its 50-day moving average, which it held since February. "The precious metals are suffering from the strength of the dollar. It looks like a classic risk-off market, and what you are seeing today is complete inverse correlation with the dollar," said Jeffrey Sherman, commodities portfolio manager of DoubleLine Capital, an asset management firm with $12.5 billion in assets.
Spot gold was down 1.9 percent at $1,519.44 an ounce by 11:57 am EDT (1557 GMT), and bullion priced in other currencies such as euros, sterling and Swiss francs also came under pressure. US August gold futures fell $32.90 at $1,520.50. Silver fell 3.2 percent to $35.18 an ounce, while platinum and palladium fell by nearly 3 percent.
The Reuters/Jefferies CRB commodities index fell to a near its lowest level in 2011, led by oil's dive to a four-month low after the world's consumer nations said they would band together to aid the global economy by releasing emergency oil reserves for the third time ever.
The price of gold is 3.5 percent below its early May record high as the 2 percent gains in the dollar since then has hampered any rallies, although gold in sterling has hit record highs this week and gold in euros has neared its recent all-time peaks. Among platinum group metals, platinum was last down 2.7 percent at $1,699.49 an ounce, while palladium was down 2.8 percent at $744.97. Investor sentiment in palladium weakened after Swiss data showed a slowdown in both imports and exports of palladium from one of Europe's leading clearing hubs for platinum group metals.