Gold Seen Gaining as Europe Debt Crisis Increases Demand
The euro fell to the lowest level since July 2010 versus the dollar as Spanish bond yields climbed after central bank Governor Miguel Angel Fernandez Ordonez resigned a month early amid criticism over the nationalization of Bankia group. Egan- Jones Ratings Co. downgraded Spain yesterday and the European Commission called for direct euro-area aid for troubled banks.
“Ongoing concerns about the euro, the downgrading of Spain and the risk of contagion is of course bullish for gold,” analysts at brokerage GoldCore Ltd. in Dublin said in a report.
Gold for August delivery rose 0.3 percent to $1,555.20 an ounce by 7:57 a.m. on the Comex in New York. Prices reached a one-week low of $1,546.10 today and are 6.5 percent lower in May for a fourth monthly decline, the longest losing run since 2000. Bullion for immediate delivery was 0.1 percent lower at $1,554.27 in London.
The metal is down 0.7 percent this year after 11 consecutive annual increases. Holdings in the SPDR Gold Trust, the biggest exchange-traded product backed by bullion, were unchanged at 1,270.3 metric tons yesterday, according to figures on the company’s website.
Spain backtracked on a plan to use government debt instead of cash to bail out Bankia, the country’s third-largest lender, while Prime Minister Mariano Rajoy struggles to shore up the nation’s lenders without overburdening public finances.
Silver for July delivery was little changed at $27.78 an ounce and headed for a third monthly drop. Palladium for September delivery was 0.4 percent lower at $603.70 an ounce. Platinum for July delivery fell 1 percent to $1,414.50 an ounce.
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