Gold hit 1-week low as safe-haven demand ebbs

09:12, May 19, 2010      

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Gold futures on the COMEX Division of the New York Mercantile Exchange ended much lower Tuesday on dwindling safe-haven demand, as investors' risk appetite have been lifted by the news that European Union lent Greece 14.5 billion euros in aid as planned. Silver and platinum both rose.

The most active gold contract for June delivery dropped 13.5 U. S. dollars, or 1.1 percent, to finish at 1,214.6 dollars. The price touched 1,206.60 dollars, the lowest level for a most-active contract since May 11 in earlier session.

The Greek government said on Tuesday that it has received 14.5 billion euros in aid from the European Union, as the first installment of the rescue package, which will help the debt- plagued country to repay an 8.5 billion euro loans maturing Wednesday.

Investors who remained skittish about the prospect of the eurozone debt crisis which may spread beyond eurozone, have continued to flock to gold through last week, and pushed gold price to hit a record high of 1,249.7 U.S. dollars per ounce last Friday. The fact that aid for Greece to prevent debt default has arrived on time shored up investor's confidence and eroded gold's appeal as safe-haven.

Meanwhile, euro continued to drop against U.S dollar on Tuesday, and the recent dollar rally has decreased gold's value as an alternative asset.

Investors who have been worried that the recent upward move of gold price may not last, started selling gold to take profit on Tuesday. And the recent market volatility has reduced demand from some global retailers.

July silver edged up 2 cents to settle at 18.879 dollars per ounce. July platinum was up 27.3 dollars, to close at 1,690.5 dollars an ounce.



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