Marcy Nicholson and Clara Denina
(Australian Associated Press)
Gold has fallen to a near four-month low, while silver has sunk nearly seven per cent and platinum has dropped to a 2009 low, as the US dollar rallied ahead of an emergency eurozone summit on Greece with the country’s banks rapidly running out of cash.
Gold, usually seen as an alternative investment in times of financial and economic uncertainty, has failed to see significant haven buying due to the Greek crisis as fears of contagion seem to be limited, traders said.
“Attention is certainly on the Greek crisis, which is re-inforcing the dollar against the euro and that’s obviously weighing on gold, which is not being perceived as a preferred safe haven at the moment,” ActivTrades chief analyst Carlo Alberto de Casa said.
“A close below $US1,157 could trigger further losses to the yearly low of $US1,143 and then the $US1,130 area,” he added.
“The strong US dollar is a primary pressure factor in gold but it’s less so in gold than virtually every other commodity,” said Mike McGlone, head of research US, ETF Securities in New York.
Precious metals fell along with the 19-market Thomson Reuters CoreCommodity Index that dropped as much as 2.2 per cent.
Spot gold dropped to its lowest since March 18 at $US1,148.05 an ounce and was down 1.1 per cent at $US1,156.75 by 3.45pm EDT (0545 AEST Wednesday).
US gold futures for August delivery settled down 1.8 per cent at $US1,152.60 an ounce, with volume surging as prices fell to session lows, reaching the largest one-hour spurt of volume since April 27.
Gold weakness and US dollar strength also hit the rest of the precious metals complex, with silver down 6.9 per cent to $US14.65 an ounce, its lowest since December 1, 2014.
This lifted the gold-to-silver ratio to around 77 ounces, the highest since January 2009, up sharply from 74.4 ounces on Monday.
Palladium fell 5.6 per cent a two-year low at $US639.50 an ounce and platinum dropped 3.8 per cent to its lowest since February 2009 at $US1,021.50 an ounce.
In trading of other assets, global equity markets fell on Tuesday and the euro hit a five-week low against the US dollar as euro zone leaders held an emergency summit to discuss Greece’s future in the currency bloc, while commodities sold off on China demand worries.
Gold’s upside has also been hurt by the prospect of higher US interest rates later this year, which would boost US dollar demand and increase the opportunity cost of holding the metal.