Gold dropped after Italy auction

Financeroll – Gold dropped to its lowest in almost 6-months on Thursday as the euro fell against the dollar after an Italian bond auction saw yields at an unsustainable level and renewed euro zone fears and credit tightness worries. Echoing the weakness in gold, spot platinum fell more than 3 percent to its lowest since November 2009 and silver fell more than 3 percent to a 3-month low.

The euro fell below $1.29 for the first time in 15 months as fear that Europe's debt crisis could worsen next year left traders scrambling to sell the currency before the calendar turns.

The latest cause of concern was Italy, which had to pay nearly 7 percent to borrow at a 10-year bond auction, a level seen as still uncomfortably high for a country with such a high debt burden and facing slow growth. A stronger U.S. unit makes dollar-priced commodities such as precious metals costlier for holders of other currencies.

Spot gold fell 1.57 percent to $1,530.60 an ounce by 1427 GMT, from $1,555.19 late in New York on Wednesday. Earlier it hit a near six-month low of $1,521.94. U.S. gold February futures lost more 2 percent to $1,530.70.

A spiraling euro debt crisis and increased need for liquidity in the last few months have pushed banks and other financial participants to sell assets including gold, generally deemed to be a safe haven during economic woes. Gold was on course for a 12 percent fall this month, its biggest drop since October 2008 when the credit crunch hit most financial markets.

A rebound for gold is possible if policymakers take measures such as liquidity injection or interest rates cuts, which could help alleviate the credit crunch and would lessen the necessity to sell assets such as commodities. Silver was down 2.26 percent at $26.43 after an ounce while palladium was down 1.27 percent at $626.41 an ounce. Platinum was last down 2.57 percent at $1,347.50 an ounce. It earlier hit its lowest in more than 2 years at $1,338.20. [RTR/FR]

About the Author


has written 24570 stories on this site.

Write a Comment

Gravatars are small images that can show your personality. You can get your gravatar for free today!