Gold falls in Europe
Thursday, 20 May 2010
NEW YORK, May 19 (Reuters): Gold fell in Europe Wednesday, caught up in selling of other assets like stocks and the euro, after Germany's move to ban some naked shorting and after German Chancellor Angela Merkel said the euro was in danger.
Spot gold was bid at $1,207.65 an ounce at 0949 GMT (5:49 a.m. ET), against $1,219.70 late in New York on Tuesday. US gold futures for June delivery on the COMEX division of the New York Mercantile Exchange fell $6.80 to $1,207.80 an ounce.
The metal earlier slipped as low as $1,205.60 an ounce, caught up in selling of other assets in response to Germany's move, and as confidence in the euro waned.
"We notice clear signs of nervousness in the gold market, taking into account the overnight developments in euro zone," said Pradeep Unni, senior analyst at Richcomm Global Services.
"Investors seem to be taking their money out of bullion partly to lock profits, but more importantly to pay the margin calls arising out from other markets."
Germany announced on Tuesday a ban on some high-risk bets that prices of bonds and stocks will fall, in an attack on the financial speculation on which it blames much of the euro zone's debt crisis.
The euro fell to a fresh four-year low against the dollar in response, while oil prices dropped more than 2 percent, base metals prices retreated and European shares fell as much as 2.6 percent. "Whilst the move is apparently designed to limit intraday market volatility, it leaves the euro open to further attack," said Credit Agricole in a note.
"The worry is that the move is deemed a panic response to the situation and that if the market cannot respond to this by selling equities or debt, they will do so by offloading the currency."
Investment in gold stood firm, with holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, steady at a record 1,217.108 tonnes on Tuesday.
Holdings of gold-backed exchange-traded commodities operated by London's ETF Securities have risen nearly 700,000 ounces or 9 per centso far this month to 8.437 million ounces.
Spot gold was bid at $1,207.65 an ounce at 0949 GMT (5:49 a.m. ET), against $1,219.70 late in New York on Tuesday. US gold futures for June delivery on the COMEX division of the New York Mercantile Exchange fell $6.80 to $1,207.80 an ounce.
The metal earlier slipped as low as $1,205.60 an ounce, caught up in selling of other assets in response to Germany's move, and as confidence in the euro waned.
"We notice clear signs of nervousness in the gold market, taking into account the overnight developments in euro zone," said Pradeep Unni, senior analyst at Richcomm Global Services.
"Investors seem to be taking their money out of bullion partly to lock profits, but more importantly to pay the margin calls arising out from other markets."
Germany announced on Tuesday a ban on some high-risk bets that prices of bonds and stocks will fall, in an attack on the financial speculation on which it blames much of the euro zone's debt crisis.
The euro fell to a fresh four-year low against the dollar in response, while oil prices dropped more than 2 percent, base metals prices retreated and European shares fell as much as 2.6 percent. "Whilst the move is apparently designed to limit intraday market volatility, it leaves the euro open to further attack," said Credit Agricole in a note.
"The worry is that the move is deemed a panic response to the situation and that if the market cannot respond to this by selling equities or debt, they will do so by offloading the currency."
Investment in gold stood firm, with holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, steady at a record 1,217.108 tonnes on Tuesday.
Holdings of gold-backed exchange-traded commodities operated by London's ETF Securities have risen nearly 700,000 ounces or 9 per centso far this month to 8.437 million ounces.