Gold Drops to 1-Week Low as Europe Woes Erode Demand for Metal
Gold futures fell to the lowest price in more than a week as concern that Europe’s debt crisis is deepening boosted the dollar and curbed demand for the metal as an alternative investment.
The dollar rose to a two-year high against the euro as the cost of insuring against default on Spanish government debt climbed to a record. Greece’s creditors meet this week amid doubts that the country will meet its bailout commitments. German Vice Chancellor Philipp Roesler said he’s “very skeptical” that European leaders will be able to rescue Greece.
“The Europe concerns are back, and we are seeing a flight to cash,” David Meger, the director of metal trading at Vision Financial Markets in Chicago, said in a telephone interview. “The stronger dollar is working against gold.”
Gold futures for August delivery fell 0.3 percent to settle at $1,577.40 an ounce at 1:49 p.m. on the Comex in New York, after touching $1,562, the lowest for a most-active contract since July 12. The price slid 0.6 percent last week and is down 1.7 percent this month.
Holdings in the SPDR Gold Trust, the biggest exchange- traded product backed by gold, fell 15.1 metric tons last week, or 1.2 percent, the largest drop since Dec. 23, according to data compiled by Bloomberg.
The Standard & Poor’s GSCI Spot Index of 24 raw materials slumped as much as 3.3 percent, heading for the biggest fall since July 6.
Silver futures for September delivery dropped 1 percent to $27.042 an ounce in New York, the biggest fall since July 10.
On the New York Mercantile Exchange, platinum futures for October delivery fell 1.1 percent to $1,398.90 an ounce. Palladium futures for September delivery declined 0.9 percent to $570.95 an ounce.
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