MW: Gold falls as inflation, growth worries move to backburner
By April H. Lee, MarketWatch
NEW YORK (MarketWatch) -- Gold fell below $1,181 an ounce Monday, extending last week's drop, as retreating fears about inflation and the risks to global growth cooled demand for safe-haven assets.
Gold for August delivery declined $8.1, or 0.7%, to $1,180.4 an ounce on the Comex division of the New York Mercantile Exchange. The SPDR Gold Trust's (GLD 115.34, -1.33, -1.14%) shares were off 1%.
Analysts said gold was responding to moves in equity markets, which have been sensitive to daily shifts in sentiment about whether the U.S. is headed for a double-dip recession.
Renewed optimism about global growth, combined with recent data showing little immediate worry about inflation, weighed on bullion Monday.
"After gold went so high, where do we go from there? People started selling off as fears eased. Previously it was an inflation play," said Dan Cook, senior market analyst at IG Markets.
"Gold will probably track equity as we move forward into the week, although it's been kind of a technical trade now," he said.
On Monday, U.S. stocks fluctuated in early trade, helped by results from Halliburton Inc. (HAL 28.67, +1.16, +4.20%) and a round of deal-making. Oil and other commodities used commercially, including copper, gained. See Market Snapshot for more on U.S. stocks.
On Friday, the Labor Department reported the main consumer-price index for June dropped 0.1%, the third straight monthly decline. The core rate, viewed as a better measure of inflationary trends, rose 0.2% but remains at historic lows.
Gold on Friday tallied its biggest one-day drop so far this month, sliding $20.10, or 1.7%, to end at $1,188.20 an ounce.
The dollar fell Monday, adding to losses after the National Association of Home Builders/Wells Fargo housing market index slid to 14 in July from a downwardly revised 16 in June. The dollar index (DXY 82.48, -.00, -.00%) recently traded at 82.48 vs. 82.504 Friday.
European shares struggled after Moody's downgraded Irish government bonds by one notch, to Aa2 from Aa1, due to a deteriorating economic outlook. Meanwhile, news that talks between Hungary and the International Monetary Fund and European Union over an existing assistance program broke down over the weekend also weighed on sentiment. Read more about Hungary's issues.
Copper for September was up a penny, or 0.4%, to $2.91 a pound, while silver followed gold's lead and sank 11 cents, or 0.6%, to $17.68 an ounce. Platinum and palladium also fell.
