MW:Gold prices fall as Europe worries rattle market
By V. Phani Kumar and Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — Gold prices declined on Monday as doubts began creeping into the market about how much last week’s measures by the European Union will do to ease problems in the region, pushing investors into dollars and away from commodities.
Gold futures for February delivery GC2G -1.77% fell $25.30, or 1.5%, to $1,692 an ounce in electronic trading during the early European trading day.
Gold dropped below the psychologically important $1,700 level in Asian trading.
Analysts at KASB Securities Ltd. said in a note to investors that the first support for gold is at $1,691.28 and the second at $1,699.45. They said that from a technical perspective, gold looks like it’s about to become oversold, suggesting that investors buy on weakness.
The fall in gold prices more than offset the modest gains the metal recorded during the regular session on the Comex division of the New York Mercantile Exchange on Friday.
The U.S. dollar index DXY +0.71% , a measure of the greenback against six major global counterparts, rose to 79.02 from 78.622 in North American trade Friday, weighing on precious metals that are priced in the currency.
EU measures
European stock markets fell on Monday after Moody’s Investors Service said measures announced at last week’s European Union summit offered little new in the battle against the sovereign-debt crisis, and credit ratios in the region remain under pressure.
The drop for gold futures also came as one analyst highlighted doubts about emerging-market demand, noting last week’s data on a sharp drop in China’s inflation and India’s reduction of its growth target for the financial year ending March 2012.
“Between them, India and China account for [about] 55% of global gold- jewelry demand and without a strong import market in at least [the] two largest gold consumers, it would be difficult for gold prices to advance significantly and sustain a rally,” HSBC analyst James Steel wrote in a report.
Among other precious metals, the March contract for silver SI2H -2.38% declined 76 cents, or 2.3%, to $31.51 an ounce, and palladium futures for the same month PA2H -2.28% lost $15.25, or 2.2%, to $671.25 an ounce.
January platinum PL2F -1.16% prices eased $12.70, or 0.8%, to $1,503.50 an ounce.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
