Bloomberg News

Gold Declines to Six-Week Low as Greek Default Concerns Ease

July 01, 2011

July 1 (Bloomberg) -- Gold futures tumbled to a six-week low as Greece progressed in staving off a default, curbing demand for the metal as an investment haven.

Greece may get as much as 85 billion euros ($124 billion) in new financing, including a contribution from private investors, in a second bailout aimed at preventing default and ending the euro region’s debt crisis, according to an Austrian Finance Ministry official. Gold dropped 2.2 percent last month.

“There could be scope for further pressure in the short term,” James Moore, an analyst at TheBullionDesk.com in London, said in a report. An accord on austerity measures in Greece is “likely to trigger an increase in risk appetite. In addition, gold is entering what is traditionally a slow period for physical demand,” he said.

Gold futures for August delivery fell $20.20, or 1.3 percent, to settle at $1,482.60 an ounce at 1:57 p.m. on the Comex in New York. Earlier, the price touched $1,478.30, the lowest for a most-active contract since May 17. The price dropped 1.2 percent this week.

The dollar headed for a weekly decline against a basket of major currencies, snapping a three-week rally.

“Gold’s inability to extend further gains in recent sessions, despite a weaker dollar, could be a warning sign heading into the third quarter,” Australia & New Zealand Banking Group Ltd. said in a report.

Silver futures for September delivery fell $1.127, or 3.2 percent, to $33.705 an ounce. The price dropped 2.7 percent this week.

Palladium for September delivery slipped $3.20, or 0.4 percent, to $757.45 an ounce on the New York Mercantile Exchange. The metal rose 3.5 percent this week.

Platinum for October delivery dropped $9.30, or 0.5 percent, to $1,716.80 an ounce. The price gained 2.2 percent this week.

--With assistance from Phoebe Sedgman in Wellington. Editors: Patrick McKiernan, Millie Munshi

To contact the reporter for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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