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Sunday, June 26, 2011

why are gold and silver dropping june 27 2011

why are gold and silver dropping june 27 2011 : Gold may extend losses, after capping the biggest weekly drop in seven weeks, as weaker oil prices and a pledge by European Union leaders to avert a Greek default slashed the metal’s appeal as a haven.

Bullion for immediate delivery declined as much as 0.3 percent to $1,498.15 an ounce and was at $1,500.05 by 10:14 a.m. in Singapore. It plunged 2.4 percent last week, the biggest loss since the week ending May 6. Futures for August delivery were little changed at $1,501.30 an ounce on the Comex in New York.

“In addition to the Greek rescue plan, gold is falling on the back of the strengthening dollar,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul. “Oil tumbled, lowering inflation pressure.”

EU leaders vowed to help stave off a Greek default as long as Prime Minister George Papandreou pushes through a package of budget cuts this week. European finance chiefs will decide on July 3 whether Greece has met the conditions for its next aid. Greek lawmakers are expected to start a three-day debate today and vote on the austerity measures on June 29.

The dollar gained 0.3 percent against a basket of six major currencies, after rising for three straight weeks, eroding the allure of gold as an alternative investment. Crude oil lost 0.7 percent after falling 2 percent last week, the fourth straight decline, reducing demand for an inflation hedge.

Gold has gained 5.6 percent this year. The price reached a record $1,577.57 on May 2 as Greece’s debt crisis and record-low U.S. borrowing costs boosted demand for an alternative to currencies.

Immediate-delivery silver dropped 0.5 percent to $34.1200 an ounce after plunging 4.4 percent last week, the fourth straight loss.

Cash palladium declined 1 percent to $726.50 an ounce and spot platinum decreased 0.6 percent to $1,679 an ounce.

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