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Gold drops, dollar climbs on growing European debt concerns

Published 05/09/2012, 08:53 PM
Updated 05/09/2012, 08:54 PM

Investing.com - Gold prices fell in Asian trading on Thursday, as ongoing fears that Greece is moving closer to default and abandoning the euro sent more and more investors fleeing to the safety of the dollar.

The dollar and gold often trade inversely from one another.
 
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded down 0.19% at USD1,591.25 a troy ounce.

Gold traded at a low of USD1,588.45 a troy ounce and hit a high of USD1,591.65 a troy ounce during the session.

The precious metal sought to test support at USD1,579.65 a troy ounce, the low of May 9, and resistance at USD1,604.75, the high on May 9.

Political and economic turmoil in Europe continued to pressure gold down.

In Greece, the leftist Syriza party is trying to patch together a government in wake of last weekend's parliamentary elections, and concerns are growing the country won't have a government in place by June, when Athens is due to receive a bailout tranche.

Syriza opposes austerity measures tied to receiving rescue funding, and worries escalated when party chief Alexis Tsipras said the financial aid package was null and void and called for a moratorium on debt payments.

In Spain, the yield on the country’s 10-year bonds rose above 6% as investors feared financial problems will return.

Talk that that Spain will demand its banks set aside EUR35 billion to cushion the financial sector fanned fears Madrid will need a bailout.

Gold often performs well amid times of roiling paper currencies but investors have sought safety in the liquid dollar lately as the euro tanks.

Elsewhere on the Comex, silver for July delivery was up 0.06% and trading at USD29.258 a troy ounce, while copper for July delivery was down 0.19% and trading at USD3.661 a pound.







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