Gold closes at 3-month low as safe-haven demand fizzles

08:05, July 28, 2010      

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Gold futures on the COMEX Division of the New York Mercantile Exchange plunged and settled at a three- month low Tuesday, as the recent calmness in the market sparked less demand for gold as a safe-haven. Silver and platinum both retreated.

The most active gold contract for August delivery plunged 25.1 dollars, or 2.1 percent, to finish at 1,158.0 U.S. dollars, the lowest settlement price since April 26.

The Case-Shiller index showed Tuesday that the U.S. home prices increased in May for the second month in a row, which surpassed economists' expectation. Although it was not good enough to prove a sustained recovery in the U.S. housing markets, it offered markets a glimpse of hope that the U.S. economic environment isn't deteriorating further.

U.S. equity markets and dollar extended gains after the housing price report was released, as recent upbeat corporate earning reports and positive macroeconomic data reduced ongoing uncertainty about the U.S. economic outlook.

Gold lost support as equity markets held up rather well Tuesday morning and extended gains for their fourth consecutive sessions. The stabilization in the equity markets fueled investor's risk appetite, and let many investors sell off gold to purchase riskier assets for higher return.

Meanwhile, U.S. consumer confidence dropped in July to its lowest point since February, pressured by the weak job markets, according to a report from the Conference Board. The slumping consumer confidence heavily weighed on gold and other commodities markets and added to the negative tone of the precious metal on Tuesday.

September silver lost 57.4 cents, or 3.2 percent, to settle at 17.626 dollars per ounce, October platinum dropped 19.1 dollars, or 1.2 percent, to settle at 1,536.7 dollars per ounce.

Source: Xinhua


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