The U.S. equity markets gave up early gains to close the day deep in red territory. Political concerns and lingering uncertainty surrounding the upcoming sequestration deadline weighed on investor sentiment, while the VIX surged from 14.17 to 18.99.
At the close: DJIA: -1.55%, S&P 500: -1.83%, NASDAQ: -1.44%.
On the commodities front, WTI crude (NYSEARCA:USO) for April delivery lost 2 cents, dropping to $93.11 per barrel. Brent for April delivery climbed 34 cents to $114.44 per barrel.
Gold (NYSEARCA:GLD) futures for April delivery, the most active contract, gained $13.80 to settle at $1,586.60 per ounce, while silver (NYSEARCA:SLV) futures for March jumped 53 cents to close at $28.99.
Both precious metals rallied, despite hedge funds cutting bullish bets on gold by the most in about five years. According to U.S. Commodity Futures Trading Commission data, money managers and other large speculators decreased net-long positions in gold contracts and options by 40 percent.
The Italian election appears to be providing support for gold and silver, as exit polls raised fears that the country may not have a stable government. Projections show former Italian Premier Silvio Berlusconi’s center-right party ahead in the Senate, which could threaten austerity measures and bring the euro zone financial crisis back into focus. Earlier readings had Pier Luigi Bersani’s center-left party leading the field. The fiasco was a primary contributor to the broad decline in markets today.