Gold falls on Spain downgrade
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E-mail Xinhua, May 30, 2012
Gold futures on the COMEX division of the New York Mercantile Exchange ended a two-day winning streak and lost ground on Tuesday, as a credit downgrade for Spain bolstered the U.S. dollar and put pressure on the precious metal.
The most active gold contract for June delivery lost 20.2 dollars, or 1.29 percent, to settle at 1,548.7 dollars per ounce.
Though going up more than 12 dollars earlier in the session, gold ultimately closed down more than one percent following a strengthening of the U.S. dollar. The greenback gained momentum primarily on the bearish news from Spain.
News that Egan-Jones downgraded Spain's credit rating to B from BB- and that Spanish retail sales in April fell 9.8 percent year over year sent the euro plummeting below the 1.25-dollar trading level, as investors flocked to the dollar as a safe-haven asset.
Gold saw heavy pressure from the higher dollar, as a stronger greenback makes commodities in general more expensive for holders of other currencies.
Gold, which previously took some momentum from economic worries such as the situation in Europe, 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 energy commodities.
A late break in crude oil futures thus did little to support gold on Tuesday. And while the Dow Jones industrial average was still in positive territory, by mid Tuesday afternoon it also retreated from the session's earlier highs.
Silver posted losses even sharper than those of gold. Silver for July delivery shed 59.5 cents, or 2.1 percent, to settle at 27. 791 dollars per ounce.
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