Gold sinks as Italy panic wanes

Prices plunge as auction demand for Italian bonds eases fears of a financial meltdown.

By TheStreet Staff Nov 10, 2011 12:34PM

Image: Gold (© Anthony Bradshaw/Photographer)By Alix Steel, TheStreetTheStreet

 

Updated at 3:42 p.m. ET

 

Gold futures fell Thursday along with the U.S. dollar as panic over a financial meltdown in Italy receded.

 

Gold (-GC) for December delivery settled down $32 at $1,759.60 an ounce at the Comex division of the New York Mercantile Exchange. Gold traded as high as $1,776.90 and as low as $1,736.60 an ounce, while the spot price was losing a more modest $9, according to Kitco's gold index.

 

Silver (-SI) prices shed 25 cents to finish at $34.10 an ounce, while the U.S. dollar index was down 0.5% at $77.61.

 

Gold prices suffered heavy losses Thursday as inflation fears ebbed and as investors had to sell gold to raise cash after Wednesday's sell-off in the stock market.

 

Related Articles

Italy was able to borrow 5 billion euros for one year at the incredibly high interest rate of 6.087%, but there was demand for the auction. Interest rates were also well off the 7% high for 10-year notes.

 

The fact that there were lenders out there for Italy eased fears that the European Central Bank would have to become the lender of last resort and print money to help save the eurozone.

 

Greece also named a new Prime Minister, Lucas Papademos, while Italy's Prime Minster Silvio Berlusconi was gearing up to resign. The news calmed markets somewhat and investors felt less need to buy gold as protection.

 

Any kind of mass panic could spur more liquidation in gold and trigger euro selling, which would prop up the dollar and further hurt gold -- the dollar index was already clawing back from session lows. On the flip side, if investors need safety they may look to gold.

 

Global selling pressure was also weighing on the metal. "Gold yesterday set a new all-time high in Indian Rupee terms and hit its highest in euros and sterling in over a month," said James Moore, a research analyst at FastMarkets.com. "Short term, the complex is likely to remain under pressure . . . (but) the metal will benefit from further flight-to-safety demand."

 

The majority of selling was coming from the futures market, with the spot price, representing physical demand, holding up better and with tonnage in the popular gold ETF SPDR Gold Shares (GLD) actually growing. The ETF has added more than 20 tons this week. "Given the ongoing high uncertainties and the current risk aversion, gold should remain well supported despite the latest price slump," Commerzbank said.

 

Gold mining stocks were mixed Thursday despite a strong snapback rally in broader equities. Barrick Gold (ABX) was up slightly to $51.17, while Newmont Mining (NEM) lost 0.5% at $68.92. Goldcorp (GG) was down 0.6% to $51.45, and Randgold Resources (GOLD) was falling 1.3% to $115.

3Comments
Nov 10, 2011 7:26PM
avatar
Will I be buying or selling?........ NONE OF YOUR BUSINESS! Wink
Nov 13, 2011 5:15PM
Nov 10, 2011 5:27PM
avatar
[ Begging for helps ] Complaint about Human Rights Violations by IBM China on Centennial 

Please Google:

Tragedy of Labor Rights Repression in IBM China
     or
How Much IBM Can Get Away with is the Responsibility of the Media 
     or
IBM detained mother of ex-employee on the day of centennial

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min
Sponsored by:

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes
[BRIEFING.COM] Nikkei...15529.40...+71.50...+0.50%.  Hang Seng...24428.63...+212.60...+0.90%. Nasdaq at... NYSE Adv/Dec 0/0... Nasdaq Adv/Dec 0/0.

Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Sponsored by:

VIDEO ON MSN MONEY