Gold Hits 2012 Low
Gold for June delivery closed down 0.6% today, at $1,594.20/ounce on Comex, the lowest settlement price since December 30. Traders are reacting to two things: a strengthening U.S. dollar and an even more uncertain situation in Europe. The euro sank…
The euro sank today against the dollar, falling below $1.30 late last night and staying there all day. The political situation in Greece, with no one able yet to form a government, weighed on the euro. So did fears that Greece would just kiss the monetary union good-bye and default on its euro-denominated debt. Spain’s sale of 10-year bonds at more than 6% interest and its likely bailout of some of its largest banks added to the uncertainty.
As the dollar rises, the cost of a dollar-denominated gold futures contract gets more expensive. This tends to lead to a sell-off of gold and more buying interest in dollars. Gold’s value as a hedge against a falling dollar also declines in this market situation. Traders have also been betting on lower gold prices, which added to the drop.
Paul Ausick
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
