Gold falls from 5-month high as euro climbs

09:01, May 11, 2010      

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Gold futures on the COMEX Division of the New York Mercantile Exchange ended lower on Monday after hitting a five-month high, as gold's safe-haven appeal was reduced by the nearly-one-trillion-dollar loan package offered by the EU and the IMF to avert a festering eurozone debt crisis. Silver and platinum both climbed.

The most active gold contract for June delivery dropped 9.6 U.S. dollars, or 0.8 percent, to finish at 1,200.8 dollars per ounce.

The European Union (EU) and the International Monetary Fund ( IMF) reached agreement on Monday to offer nearly 1 trillion U.S. dollars in loans to debt-plagued eurozone countries and to support the weak euro. The European Central Bank also agreed to buy government and private debt from the eurozone in order to shore up liquidity and lower borrowing costs.

The aggressive steps taken by European countries fueled investor's risk appetite, drove the embattled euro up against dollar on Monday, and eroded the appeal of gold as safe-haven.

Meanwhile, the fact that the U.S. Federal Reserve and other central banks also jumped in with financial support to prevent the eurozone debt crisis from damping the global economic recovery also reassured investors.

July silver rose 10.1 cents, or 0.5 percent, to settle at 18. 552 dollars per ounce. July platinum was up 27.7 dollars, or 1.7 percent, to close at 1,693.5 dollars an ounce.



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