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Gold Declines on Dollar's Gain as Europe Releases Stress Results on Banks
Gold futures fell for the first time in four days after European regulators said seven of 91 banks failed a financial stress test, eroding the value of the euro against the dollar.
The European Union said the seven banks can’t survive potential losses on sovereign-bond holdings. The euro dropped as much as 0.8 percent against the greenback, reducing demand for gold as an alternative to the U.S. currency. Gold has fallen 6.2 percent from a record $1,266.50 an ounce on June 21.
“Gold is tentatively re-establishing its relationship to the dollar,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “Gold is trying to track the euro.”
Gold futures for August delivery dropped $7.80, or 0.7 percent, to $1,187.80 on the Comex in New York. The metal has climbed 8.4 percent this year.
Gold traditionally has moved in tandem with the euro as an alternative to the dollar. This year, some investors sold euros and purchased dollars and gold amid Europe’s fiscal woes.
“Some of the risk premium has come out of the market, and gold continues to struggle with the $1,200 level,” said Matt Zeman, a trader at LaSalle Futures Group in Chicago.
Silver futures for September delivery fell 1.9 cents, or 0.1 percent, to $18.101 an ounce. This week, silver gained 1.8 percent while gold was little changed.
Platinum futures for October delivery rose $13.40, or 0.9 percent, to $1,542.80 an ounce on the New York Mercantile Exchange, up 2 percent this week.
Palladium futures for September delivery advanced $9.85, or 2.2 percent, to $466.75 an ounce, up 4 percent this week.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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