By Claudia Assis and Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold prices swerved between small gains and losses Tuesday as investors worried about European countries’ sovereign-outlook downgrades and the dollar moderated its early rise.
Gold for August delivery GCQ2 -0.03% recently advanced 20 cents to $1,577.50 an ounce on the Comex division of the New York Mercantile Exchange. Gold had traded as high as $1,584 and as low as $1,571 an ounce.
Gold ended lower on Monday, off 0.3% at $1,577.40 an ounce. Some technical buying emerged below $1,570 an ounce, analysts at VTB Capital said in a note.
Despite the renewed interest, bullion “has yet to see any substantial safe-haven buying ... Market participants remain sidelined, as gold continues to swing back and forth with riskier assets and physical flows in Asia remaining subdued,” they said.
The dollar index DXY +0.13% rose to 83.725, up from 83.640 late Monday. The gauge tracking the performance of the U.S. against a basket of other major currencies was off the day’s highs, however. Read more in currencies.
Strength in the greenback is a negative for dollar-denominated commodities such as gold and oil, because it makes them more expensive for holders of other currencies.
Moody’s Investors Service late Monday lowered the outlook on Germany’s triple-A rating to negative from stable due to mounting uncertainties from the euro-zone debt crisis.
Moody’s also downgraded the outlooks on the Netherlands and Luxembourg. The debt-rating agency cited the possibility of Greece’s exit from the euro zone and the impact that would have on Spain and Italy.
Even if Greece stays in the euro there will be need for "greater collective support” for countries such as Spain and Italy, and the burden is likely to fall heavily on better-rated euro-zone members, Moody’s said.
In economic news, a preliminary July survey of Chinese manufacturing conditions released by HSBC showed overall activity at its strongest level in five months. See: China’s factory gauge hits strongest level in months
Silver for September delivery SIU2 -0.54% declined 15 cents, or 0.6%, to $26.89 an ounce, adding to earlier losses. September copper HGU2 -0.55% declined 2 cents, or 0.5%, to $3.36 a pound.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Polya Lesova is MarketWatch's New York deputy bureau chief. Chris Oliver in Hong Kong contributed to this report.
