MW: Gold extends losses as macroeconomic concerns wane
By Claudia Assis and Cynthia Lin, MarketWatch
SAN FRANCISCO (MarketWatch) -- Gold futures fell Wednesday, giving back prior session's gains as investors sold off on the metal's highest close in nearly two weeks and global economic recovery concerns were put to the back burner.
Gold for August delivery declined $6.60, or 0.5%, to $1,207.50 an ounce on the Comex division of the New York Mercantile Exchange, extending losses from earlier trading.
"We don't see much interest coming in," said Bernard Sin, head of currency and metals trading at MKS Finance in Geneva. Investors are largely sidelined amid quiet trading, and physical buying is light as the prices are still relatively too high, he added.
"Portugal's downgrade and huge trade deficit were one-day wonders and lack of follow-through disappointed traders" on Wednesday, said George Gero, a senior vice president at RBC Capital Markets, in e-mailed comments.
Gold rose 1.2% on Tuesday to close at its highest since June 30 after Moody's Investors Service slashed Portugal's bond ratings by two notches, rekindling worries over Euro-zone debt issues. Investors also took cues from a widening trading deficit in the U.S. in May.
The recent strength in equity markets and Greece's successful placement of government debt in an oversubscribed auction also have worked to dent gold's appeal as a safety play.
"Currently, strong price increases are not in sight," said analysts at Commerzbank AG in a note to investors. "Worries regarding a new aggravation of the European debt crisis seem to lose some importance for the time being. Benign stock markets in recent days furthermore reflect a decreasing risk aversion."
U.S. stock opened mixed despite a better-than-expected earnings from microchip giant Intel Corp. (INTC 21.73, +0.72, +3.43%) and fell slightly shortly after a larger-then-expected drop in retail sales disappointed investors.
Gold futures remained lower after the Commerce Department reported that sales at U.S. retailers dropped 0.5% in June, joining other evidence in recent weeks that have pointed to the economic recovery slowing down.
