FRX: Oil Plunges Again, Gold Falls Along With Euro
Oil plunged the most this year on concern that Europe’s sovereign-debt crisis is deepening and as a Chinese central-bank adviser said the country’s economic expansion may slow further. Futures fell 4 percent as the cost of insuring Spanish debt surged to a record. Growth in China, the second-biggest crude consuming country, may cool for a seventh straight quarter, said Song Guoqing, a member of the People’s Bank of China monetary policy committee. Economic growth in China may slow to 7.4 percent this quarter, Song Guoqing said.
Gross domestic product expanded 7.6 percent in the three months ended in June, the sixth quarterly deceleration and the weakest pace in more than three years. Song made the comments at a forum in Beijing on 21st of July. Meanwhile, easing tensions in Persian Gulf country, Iran won’t block the Strait of Hormuz as long as it has access to the waterway, the state-run Iranian Students News Agency reported, citing Ali-reza Tangsiri, deputy naval chief of the Revolutionary Guard Corps. Iran has threatened to shut the strait, a transit route for a fifth of the world’s oil, in response to sanctions aimed at halting its nuclear program. Crude oil for September delivery fell $3.69 to settle at $88.14 a barrel on the New York Mercantile Exchange. It was the biggest decrease for a front-month contract since December 24, 2011.
Gold
Gold futures fell together with the euro and a range of other markets as the financial picture continued to worsen for some eurozone nations. The metal did manage to bounce from its weakest levels as other markets did likewise, however, with some short covering occurring in gold. August gold futures settled $5.40 or 0.3%, lower to $1,577.40 an ounce on the Comex division of the New York Mercantile Exchange. Markets collectively were teetering on renewed concerns about Spain and the euro-zone, said a New York trader.
Many European stock markets took a beating and bond yields in troubled nation’s soared, scaring investors in other markets. A stronger dollar tends to pressure gold several ways. A more muscular greenback makes all commodities more expensive in other currencies and thus can hurt demand. Plus, investors often buy gold as a hedge against dollar weakness, whereas dollar strength means less such buying.
