Gold extends losses as safe-haven appeal wanes

08:03, July 20, 2010      

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Gold futures on the COMEX Division of the New York Mercantile Exchange inched down on Monday, as eurozone economic fears and inflation worries diminished. Silver dropped, but platinum eked out a 0.1 percent gain.

The most active gold contract for August delivery dropped 6.3 dollars, or 0.5 percent, to finish at 1,181.9 U.S. dollars, the lowest close for a most-active contract since May 21.

The National Association of Home Builders said Monday that its monthly reading of builders' sentiment about the housing market slid from a downwardly revised 16 in June to 14 in July, which is the lowest level since March 2009. The sluggish data suggested that homebuilders has been feeling less confidence about the industry, adding to the evidence that U.S. economic growth has slowed. The dollar continued to dip against euro and the U.S. equity markets turned lower after the report released, which rekindled investors fears of slowing economy or deflation again, and dragged down gold price, as investors usually purchase gold as a hedge against inflation.

Gold price surged to record in June, as lingering worries over eurozone debt crisis heavily weighed on euro and increased gold's appeal as safe-haven. But the euro's recent strength and the increasing optimism regarding European economic outlook have both contributed to erode safe-haven allure of gold.

September silver dipped 24.5 cents, or 1.4 percent, to settle at 17.543 dollars per ounce, October platinum added 1.0 dollars, or 0.1 percent, to settle at 1513.1 dollars per ounce.



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