Gold Falls to 3-Month Low

2010-JUL-30

From the GoldMoney News Desk --

Gold fell to a three month low at $1,156.90 on Wednesday as risk appetite continued to increase. Investors sold gold and bought back into “riskier” assets like equities. The ETFs are also suffering as the sell-off continues, on Wednesday the SPDR ETF had the biggest one-day drop in holdings since April 2008.

Equities and the Euro were up this week on the back of renewed optimism surrounding the European economy. Last week’s European stress testing went pretty much as expected, and with most banks passing the tests, markets were reassured. Seven of the 91 banks tested did fail, however this was seen as a generally good result and served to put confidence back into the markets.

Michael Lewis, head of commodities research at Deutsche Bank told Reuters: “Gold does very well in a market disruption/risk environment, which is what we obviously saw in May and June to some extent. Those concerns have come off the boil a bit.”

Gold has been in a fairly tight range since Tuesday this week from about $1,160 to $1,170. Physical buyers from the jewelry market are taking advantage of stocking up at “bargain” levels and currently keeping the yellow metal from falling to far below $1,160. However, the general consensus seems to be that there is no real force behind any sort of rally in the near term.

Silver also fell this week to $17.31/oz on Wednesday as the sell-off took its toll. Silver went into Friday up only slightly at around $17.50.

Platinum and palladium fared much better this week, probably because of the renewed optimism in the economy increasing demand for the metals in car manufacturing. By the end of the week platinum was at $1,560/oz, pretty much where it was before this week’s sell off. Whereas palladium actually ended the week higher than it started, at $485/oz.

All data and quotes sourced from Reuters.