Investing.com - Gold futures came under heavy selling pressure during European morning trade on Wednesday, falling to a one-week low, as investors sold off the euro and piled in to the U.S. dollar amid growing concerns over Spain’s deteriorating financial situation.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,549.55 a troy ounce during early European trade, dipping 0.1%.
It earlier fell by as much as 0.65% to trade at USD1,547.25 a troy ounce, the lowest since May 23.
Gold futures were likely to find near-term support at USD1,533.25 a troy ounce, the low from May 23 and resistance at USD1,585.65, the high from May 28.
Gold’s losses came amid growing concerns over the situation in Spain, where rising bond yields, the growing costs of bank rescues and a recession-hit economy fuelled fears that Madrid will be forced to seek an international bailout.
The yield on Spanish 10-year bonds climbed to their highest level so far this year on Tuesday, approaching the critical 7% threshold that preceded bailouts in Greece, Ireland and Portugal.
Late Tuesday, ratings agency Egan-Jones downgraded Spain's sovereign rating for the third time in less than a month, citing concerns over elevated government debt levels.
Jitters regarding Spain have worsened in recent sessions, after Bankia, the country’s fourth-largest lender, said it needed EUR19 billion in state aid.
The Spanish banking sector suffered another blow after the European Central Bank signaled opposition to any attempt to fund Bankia’s recapitalization through the central bank's lending facilities.
Meanwhile, Bank of Spain Governor Miguel Angel Fernandez Ordonez resigned late Tuesday, a month earlier than expected amid criticism over the handling of Spain’s debt woes.
Although gold’s appeal as a safe haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal in recent months.
A weakening euro and stronger dollar have weighed on gold instead, as the precious metal has been moving in tandem with riskier assets since hitting a record high of USD1,920 last September.
The euro dropped to a fresh 22-month low against the U.S. dollar, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.32% to trade at 82.72, the highest since September 2010.
Gold has lost its safe haven appeal to the dollar, U.S. Treasuries and German Bunds, partly as a strengthening dollar makes the metal less attractive to buyers holding other currencies.
Later in the day, Italy was set to auction up to EUR6.25 billion of five and 10-year bonds. Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves.
Elsewhere on the Comex, silver for July delivery fell 0.55% to trade at USD27.63 a troy ounce, while copper for July delivery slumped 0.9% to trade at USD3.431 a pound.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,549.55 a troy ounce during early European trade, dipping 0.1%.
It earlier fell by as much as 0.65% to trade at USD1,547.25 a troy ounce, the lowest since May 23.
Gold futures were likely to find near-term support at USD1,533.25 a troy ounce, the low from May 23 and resistance at USD1,585.65, the high from May 28.
Gold’s losses came amid growing concerns over the situation in Spain, where rising bond yields, the growing costs of bank rescues and a recession-hit economy fuelled fears that Madrid will be forced to seek an international bailout.
The yield on Spanish 10-year bonds climbed to their highest level so far this year on Tuesday, approaching the critical 7% threshold that preceded bailouts in Greece, Ireland and Portugal.
Late Tuesday, ratings agency Egan-Jones downgraded Spain's sovereign rating for the third time in less than a month, citing concerns over elevated government debt levels.
Jitters regarding Spain have worsened in recent sessions, after Bankia, the country’s fourth-largest lender, said it needed EUR19 billion in state aid.
The Spanish banking sector suffered another blow after the European Central Bank signaled opposition to any attempt to fund Bankia’s recapitalization through the central bank's lending facilities.
Meanwhile, Bank of Spain Governor Miguel Angel Fernandez Ordonez resigned late Tuesday, a month earlier than expected amid criticism over the handling of Spain’s debt woes.
Although gold’s appeal as a safe haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal in recent months.
A weakening euro and stronger dollar have weighed on gold instead, as the precious metal has been moving in tandem with riskier assets since hitting a record high of USD1,920 last September.
The euro dropped to a fresh 22-month low against the U.S. dollar, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.32% to trade at 82.72, the highest since September 2010.
Gold has lost its safe haven appeal to the dollar, U.S. Treasuries and German Bunds, partly as a strengthening dollar makes the metal less attractive to buyers holding other currencies.
Later in the day, Italy was set to auction up to EUR6.25 billion of five and 10-year bonds. Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves.
Elsewhere on the Comex, silver for July delivery fell 0.55% to trade at USD27.63 a troy ounce, while copper for July delivery slumped 0.9% to trade at USD3.431 a pound.