Gold Prices Sink On Eurozone Struggles

Gold Prices Sink On Eurozone Struggles
News

Gold prices were sinking Monday as investors moved into U.S. dollars as a safe haven on reports that Germany and France were clashing about a timeline to introduce a banking union.

Gold for December delivery was falling $13.30 to $1,764.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,775.30 and as low as $1,757.90 an ounce, while the spot price was shrinking $12.30, according to Kitco’s gold index.

“Gold price is an economic and political barometer and the EU banking discord and slow economic recovery have brought more dollar buyers to the table,” George Gero, precious metals strategist at RBC Wealth Management, wrote in a note on Monday.

Silver prices for December delivery were falling about 70 cents to $33.94 an ounce, while the U.S. dollar index was gaining 0.38% to $79.68.

Gold had enjoyed a sharp rally two weeks ago after the Federal Reserve announced a new asset-backed purchasing program that has been dubbed QE3. The stimulus plan, theoretically, would push new cash into the monetary system, which would raise inflationary pressures.

But after the move of more than $38 gold futures made on Sept. 13, the price of the yellow metal has retreated slightly as profit-taking and uncertainty in Europe have driven recent action.

Reports suggested that the eurozone’s two most influential players in bank bailouts were struggling to reach an agreement on timetables, while other reports emerged that Greece’s budget shortfall was much greater than previously expected.

Greek officials have refuted those rumors.

The euro was declining against the U.S. dollar on Monday to $1.2913, down from the previous close of $1.2981.

Typically, as the U.S. dollar strengthens against the euro, gold prices sink due to the increasing value of the paper currency against the precious metal.

Gold mining stocks were mostly lower Monday. Shares of NovaGold Resources (NG) were dipping 2.8%, while Randgold Resources (GOLD) was falling 2.5%.

Among other mining stocks, Newmont Mining (NEM) was down 1.4%, and Eldorado Gold (EGO) was declining 0.9%.

Gold ETF iShares Gold Trust (IAU) was down 0.52%.

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