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May 23, 2012, 02.48 PM IST
Gold eased on Wednesday extending sharp losses made in the previous session as investors were sceptical that an informal European Union meeting later in the day would yield steps to help solve the region's debt crisis.
Gold fell to as low as USD 1,555.03 an ounce earlier in the day, its lowest level in nearly a week, tracking a weaker euro as investors fretted about the possibility of a Greek exit and its implications for the global economy.
Investors will be watching the outcome from the EU summit, but confidence is on the wane since Germany and France are likely to confront each other on the idea of mutualised European debt.
"Can it solve the debt crisis? No," said Dick Poon, manager of precious metals at Heraeus in Hong Kong, "Everyone is worried about Greece withdrawing from the euro zone and the global economy, and would rather keep cash on hand than buying anything."
Gold has lost its safe haven appeal to the dollar, US Treasuries and German Bund, partly as a strengthening dollar makes the metal less attractive to buyers holding other currencies.
The dollar index it its highest level since September 2010, on course for its fourth consecutive weekly rise, while the euro attempted to test a four-month low against the greenback hit last week.
Spot gold lost 0.8% to USD 1,555.41 an ounce by 0629 GMT after falling 1.5% the previous day.
US. gold slumped 1.4% to USD 1,555.30, after a 1.3% fall in the previous session.
The rupee hit a record low against the dollar, which is likely to further pressure demand from India, which is losing its status as the world's top gold consumer to China.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell a hefty 1.4% to 1,265.43 tonnes by Tuesday, the lowest level in nearly four months and after failing to breach above USD 1,600.
Other precious metals weakened as well. Spot silver dropped 1.5% to USD 27.72, on course for its biggest daily decline in a week and a third straight day of decline.
"The stronger dollar is pressuring silver, even though the lower prices of the metal has lured back some buying from industrial users in Asia," said a Shanghai-based trader.
Spot platinum lost 1.2% to USD 1,421.69, extending a 1.5% dip in the previous session, despite rekindled supply concerns following operation disruption at the world's biggest platinum mine Rusternburg.
May 20 2013, 23:30
- in World News
May 20 2013, 12:21
- in Commodities