Gold falls to four-month low with Greece worries
0 Comment(s)
Print
E-mail Xinhua, May 15, 2012
Gold futures on the COMEX division of the New York Mercantile Exchange fell Monday to their lowest level since last December, as a higher U.S. dollar and news that Greece was unable to form a coalition government weighed on traders.
The most active gold contract for June delivery lost 23 dollars, or 1.45 percent, to settle at 1,561 dollars per ounce.
Gold futures were trading below the 1,560 dollar an ounce Monday and just barely managed to rise above the benchmark by the market's close.
Gold's fall went in line with the losses suffered throughout the financial markets on the day's session, as a decidedly risk- off atmosphere dominated trading.
Troubling investors most was news from Greece, where the country's two main political parties announced Sunday they would not be attending talks during the day, signaling their inability to form a coalition government.
Giving rise to alarming ideas that Greece might be forced to exit the euro zone, the situation painted Wall Street in red from the opening session bell, and as of mid-afternoon trading most markets looked as if they would be unable to recover on the day.
While before gold had actually taken some momentum from economic woes such as those in Greece, recently the precious metal seems to have lost some of its traditional safe haven appeal as investors have increasingly preferred the dollar.
In the last few months gold has largely been tracking with the direction of U.S. equities and crude oil, markets that were similarly bearish Monday.
After suffering a 160-point drop in early trading, the Dow Jones Industrial Average was still down around 70 points, while crude oil fell to below the 95 dollars a barrel trading level.
Meanwhile, the U.S. dollar spiked in response to the European uncertainty, traders flocking to the greenback as a safe haven currency.
The ICE dollar index, which measures the dollar against six other major currencies, traded at 80.57, up from 80.296 in late North American trading Friday. The euro, meanwhile, fell against the dollar to trade below the 1.29 dollar level.
The dollar is now poised to rise for eleven straight sessions, the greenback's best performance since 2008.
A stronger dollar put even further pressure on gold Monday, as it makes commodities in general more expensive for holders of other currencies.
Silver for July delivery fell 53.7 cents, or 1.86 percent, to settle at 28.353 dollars per ounce.
