MW: Gold slips as paper currencies gain traction on Europe data
By Laura Mandaro, MarketWatch
PORT LOUIS, Mauritius (MarketWatch) -- Gold futures faltered Monday as a sunnier outlook about the European economy - bolstered by European manufacturing data and recent bailout measures - lessened demand for the metal as a hedge against paper currencies.
Gold for August delivery fell $5.8, or 0.5%, to $1,224.5 an ounce on the New York Mercantile Exchange. The metal had touched a record $1,245.60 an ounce last week amid fears about a global recovery.
"Currency risk, which especially was the case in the euro and pound, is getting offloaded today," said Pradeep Unni, analyst with Richcomm Global Services in Dubai.
He said positive industrial production data from Europe and efforts from Europe to provide a backstop for struggling nations are encouraging investors back into currencies - taking away some of the appetite for gold.
Eurostat said Monday that euro-zone industrial production climbed 0.8% in April, or a 9.5% year-on-year increase. On an annual basis, industrial production rose in every euro-zone country except Greece and Ireland.
Asian and European stocks advanced, getting an extended boost from a surprisingly strong report Friday on U.S. consumer sentiment. Stock futures pointed to a higher open for Wall Street.
The euro rose to $1.2253, up 0.7% from late North American trading Friday. The U.S. Dollar Index (DXY 86.56, -0.95, -1.09%) fell to 86.478, down about 0.5% from late Friday. See Currencies for more on dollar, euro.
The British pound (CUR_GBPUSD 1.4730, +0.0171, +1.1745%) rose against the dollar after Britain's new, independent budget watchdog cut its estimates of U.K. economic growth and public borrowing over the next five years, though it warned that the expected deficit will still result in an unsustainable rise in public debt. One pound bought $1.4751, up more than 1% from late Friday.
Speaking in Tokyo, Federal Reserve President James Bullard said Europe's sovereign debt crisis was serious, and that there was a risk of a ripple effect if Asian economies cool, but neither was likely to derail global growth. See The Fed for more on Bullard.
