MW: Gold falls, but ongoing Greek worry caps decline
U.S. dollar strength outweighs Greek crisis, Bernanke comments
By Myra P. Saefong and Simon Kennedy, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold fell back Tuesday as traders took profits from a two-session gain of more than $40 an ounce, but growing concerns over Greece’s debt crisis and less-than-optimistic comments on the U.S. labor market from Federal Reserve Chairman Ben Bernanke limited the metal’s decline.
Gold for December delivery GC1Z -1.19% was last down $7.50 at $1,650.20 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, it lost as much as $20.90 to touch a low of $1,636.80.
The contract, which climbed more than $35 on Monday and $5 Friday, had traded higher in electronic trading Tuesday, to touch a high of $1,681.50. Euro-zone leaders delayed a decision on paying further aid to Greece, setting off another day of nervous trading for global markets.
The December silver contract SI1Z -2.48% followed gold lower, trading down 6.4 cents, or 2.1%, to $30.16 an ounce.
Earlier strength in the U.S. dollar had dulled gold’s shine but the greenback has since weakened. The U.S. dollar index DXY -0.23% was last at 79.556, little changed from 79.561 late Monday, after a high of 79.838.
The moves in metals came as global stock markets dropped sharply again across Europe and Asia after Jean-Claude Juncker, prime minister of Luxembourg and president of the Eurogroup of finance ministers, said late Monday that a decision on whether to hand Greece the next tranche of its bailout would be delayed to allow inspectors in Athens to continue their work. Also see Europe Markets.
Also, Bernanke said Tuesday that a close reading of recent economic data doesn’t show any hint of improvement ahead for the weak U.S. labor market. “Recent indictors, including new claims for unemployment insurance and surveys of hiring plans, point to the likelihood of more sluggish job growth in the period ahead,” Bernanke said in testimony prepared for the Joint Economic Committee of Congress.
U.S. stocks traded broadly lower, with the Dow Jones Industrial Average DJIA -1.22% down 2% to 10,453, on track for a third-straight session of losses.
Over the previous two sessions, fears over the worsening European economy had added to the move out of riskier assets and into less risky assets such as gold.
Goldman Sachs said it’s now forecasting that the euro zone will slip into a “mild recession” in the fourth quarter of 2011 and first quarter of 2012.
Simon Denham, CEO of Capital Spreads, said gold’s bounce back “did not end yesterday as investors were seen to still be considering the precious metal a safety haven and buying in to protect themselves from the market limbo caused by a looming Greek default.”
