Gold loses steam, retreats from 2010 high

By Jan Harvey and Rebekah Curtis

LONDON (BestGrowthStock) – Gold prices retreated on Tuesday from five-month highs above $1,190 hit earlier in the day, as its safe-haven status was dented by Spain’s dismissal of rumors the country needed 280 billion euros ($372.9 billion) of aid.

An earlier gold rally had lifted prices of the metal to record peaks in euro terms, sterling and Swiss francs.

Spot gold fell to a session low of $1,168.25 an ounce, versus its day’s peak of $1,191.90 an ounce. It bid at $1,172.55 an ounce at 1521 GMT, against $1,181.40 late in New York on Monday.

Spanish Prime Minister Jose Luis Rodriguez Zapatero on Tuesday dismissed as “complete madness” a market rumor that his country would soon ask for 280 billion euros in aid from the euro zone.

Investors had piled into gold earlier on concerns a 110 billion euro bailout for debt-laden Greece may not suffice to resolve its financial crisis, and that other euro zone economies like Spain may also be hit by debt problems.

“The market got too friendly toward gold,” said Afshin Nabavi, head of trading at MKS Finance. “Some profit taking started coming in,” he added.

“We have broken quite important levels. $1,175 was a good support and it went though it quite easily.”

Stoking the earlier rally, the premium investors demand to hold peripheral euro zone government bonds and the cost of insuring against defaults rose on worries over Greece’s bailout plan and fears of contagion to other issuers.

Japanese yen-priced gold reached its highest in 27 years, according to Reuters data, while gold priced in Canadian and Australian dollars and South African rand hit its highest since December.


“Gold’s (varied) roles as a commodity, an alternative currency and a safe-haven asset are pulling more in the same direction than they have all year,” said UBS in a note.

“We would look for a test of December’s record high of $1,226.44 so long as the threat of sovereign aftershocks in the euro zone persists.”

U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange fell $10.5 to $1,172.8 an ounce.

The metal largely shrugged off gains in the dollar. The euro slipped more than 1 percent versus the U.S. currency as concern grew over whether the Greek aid package will work. (FRX/: )

The dollar also climbed against a basket of six currencies after U.S. data showed factories running at their fastest pace in nearly six years on Monday.

Other precious metals, which are more industrial in use than gold, also declined and tracked losses in base metals and other industrial commodities like crude oil.

Silver prices were at $17.99 an ounce against $18.77. Platinum was at $1,676.50 an ounce against $1,720, while palladium was at $514.50 against $539.

The platinum group metals are particularly exposed to the recovery in the global automobile sector, as carmakers account for more than half of demand for the autocatalyst materials.

Data showed U.S. auto sales rose about 20 percent in April from recession-stunted results a year earlier, reflecting a still-gradual recovery in the economy. The figures were not as robust as some had hoped.

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(Editing by James Jukwey)

Gold loses steam, retreats from 2010 high