Gold, silver continue falling on dollar strength
Gold, silver continue falling on dollar strength
MADRID (MarketWatch) — Gold and silver futures continued to tumble on Wednesday as the dollar continued a record string of gains amid concerns about political problems in Greece.
Gold for June delivery fell $14.20, or nearly 1%, to $1,590.40. Gold fell nearly $35 to $1,604.50 an ounce on Tuesday, the lowest close for a most-active contract since the start of the year.
Gold dropped and global stock markets were under pressure Tuesday amid political deadlock in Greece after Sunday’s parliamentary elections.
Media reports Wednesday said the leader of Greece’s left-wing Syriza bloc, Alexis Tsipras, is continuing to try to form a government based on ripping up terms of the European Union/International Monetary Fund bailout deal.
A new Greece election in June is likely and leaves the ”distinct possibility of Greece defaulting and exiting the euro, which will have contagion on Spain, Portugal, Italy, etc,” said analysts at Sharps Pixley in a research note.
“In addition, the uncertainty would further aggravate euro-zone economic contraction, which is deflationary, something gold traders do not like to see,” the analysts said.
U.S. stock futures were trading lower and Europe markets were under pressure, with Spanish stocks especially weak as the market awaits a bank cleanup plan to be announced on Friday.
The ICE dollar index, which measures the greenback against a basket of six other currencies, rose to 79.988 from 79.719 in late trading Tuesday. ,
The dollar continued its march higher, in its longest winning run since 2008, as investors sought a safe haven from turmoil in Europe and worries about the pace of the global recovery.
The euro fell to $1.2984, from $1.3014 in late trading Tuesday. It hit an intraday low Tuesday of $1.2981.
`Ignoring good news’
Still, analysts at Sharps Pixley said gold investors are currently “overreacting to bad news and ignoring good news” such as improving physical demand from India and exploding demand in China.
They cited the 1% excise duty on jewelry in India that has just been rolled back and a jump in Chinese imports of gold in the first quarter.
“The weakness in the paper gold market may continue due to technical selling or investor fatigue...but this weakness is masking the massive activities going on in the physical gold market, especially among central banks who may be happy at a lower purchase price,” said the analysts.
Other metals also fell. Silver for July delivery fell 60 cents, or 2%, to $28.86 an ounce, after closing below $30 on Tuesday, the first close below that level for an active contract since January.
Platinum for July fell $5.70, or 0.4%, to $1,502.50 an ounce.
June palladium fell $7.70, or 1.2%, to $615.15 an ounce.
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24 septembre 2016 à 01:24
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