MW: Gold down as dollar rises on European elections
France elects new president; Greeks rebuke mainstream parties
By Claudia Assis and Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures dropped on Monday, as the U.S. dollar rose against major rivals after voters in France and Greece delivered a rebuke to parties supporting austerity measures.
Gold for June delivery GCM2 -0.52% fell $6.30 to $1,639.50 an ounce on the Comex division of the New York Mercantile Exchange. That follows a loss of in electronic trading.
The losses for the metal came as the U.S. dollar index DXY +0.19% , which measures the performance of the greenback against a basket of other currencies, rose to 79.617 from 79.468 late Friday.
Strength in the dollar puts pressure on dollar-denominated commodities because it makes them more expensive for holders of other currencies.
“A firmer U.S. dollar, which rose significantly against the euro in the wake of the elections in France and Greece at the weekend, is weighing on [the gold] price this morning,” Commerzbank analysts said in a note.
In France, voters ousted incumbent President Nicolas Sarkozy in favor of Socialist challenger Francois Hollande, while in neighboring Germany, Chancellor Angela Merkel’s coalition suffered defeat in a state election.
Merkel, working closely with Sarkozy, has been a strong proponent of austerity for the euro zone as a way out of the long-running debt crisis, while critics such as Hollande have emphasized the importance of boosting growth at a time when many European nations are sliding into recession. Read more about the election in France.
In southeastern Europe, many Greek voters backed fringe parties, rejecting the nation’s two major political parties, which had supported tough austerity measures. The election may result in political deadlock as disparate parties are unable to agree on forming a governing coalition.
Gold rose Friday, but ended the week notching a 1.2% loss.
The broader suite of metals futures tracked gold lower.
Silver for July delivery SIN2 -1.75% retreated 46 cents, or 1.5%, to $29.97 an ounce. Platinum for the same month’s delivery PLN2 -0.63% was off $7.50, or 0.1%, to $1,528.50 an ounce.
June palladium PAM2 -0.56% was off $1.95, or 0.4%, to $650 an ounce.
Copper for June HGN2 -0.11% was flat at $3.72 a pound.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Polya Lesova is MarketWatch's New York deputy bureau chief.
