Prices drop below key $1,200 mark for the first time in seven weeks
By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) -- Gold futures added to earlier losses Tuesday as the euro strengthened, with bullion falling below $1,200 an ounce for the first time since late May.
Gold for August delivery lost $17.20, or 1.4%, to $1,191.90 an ounce on the Comex division of the New York Mercantile Exchange. Other metals were higher.
The euro (CUR_EURUSD 1.2639, +0.0102, +0.8136%) strengthened Tuesday, taking away some of gold's allure. Bullion has tended to trade inversely to the euro in recent sessions, as investors offload gold bought in euros when that currency had fallen sharply.
The euro changed hands at $1.26, from $1.25 in late trade Monday, near its highest levels since early May.
Demand from jewelry buyers in India limited gold's loss, analysts said.
Jewelry demand from the South Asian country, the world's top gold consumer, had been subdued due to the high prices in recent weeks, but the current sell-off has brought Indian physical buyers back, analysts at Commerzbank said in a note Tuesday.
"Indian gold buyers ... regard the current price level as a good buying opportunity. This should prevent prices from falling much below $1,200," they added.
Gold's safe-haven demand reached a "temporary peak" in May and June, although the need for security is still present to a lesser degree, the analysts added.
Meanwhile, holdings at SPDR Gold Trust (GLD 116.65, -1.84, -1.55%) , the largest exchange-traded fund backed by gold, fell two days in a row, leaving a record high reached last week. The ETF's holdings declined to 1,318 metric tons as of Friday, from 1,320 metric tons last week.
Other metals diverged from gold prices, with most posting gains.
Copper rallied Tuesday, with the September contract adding 9 cents, or 3.1%, to $3.01 a pound. Silver reversed lower, however. September silver lost a penny to $17.70 an ounce.
