Investing.com - Gold futures came under heavy selling pressure during European morning trade on Wednesday, falling to a fresh 2012 low, as investors continued to pile in to the U.S. dollar amid growing concerns over political turmoil in Greece.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,530.85 a troy ounce during early European trade, tumbling 1.7%.
It earlier fell by as much as 1.95% to trade at USD1,526.95 a troy ounce, the lowest since December 29, 2011.
Gold futures were likely to find support at USD1,510.45 a troy ounce, the low from July 6, 2011 and resistance at USD1,585.65, the high from May 14.
Gold futures have been on a rapid decline since the outcome of the May 6 elections in Greece threw the future of the country’s international bailout deal into doubt and fuelled fears over a possible Greek exit from the euro zone.
Speculation over the possibility of a Greek exit from the euro zone intensified on Tuesday, as talks aimed at forming a coalition government failed.
A caretaker government will be appointed later Wednesday, with new elections likely in early June, fuelling fears over a potential Greek default and eventual exit from the euro zone.
Reports that Greeks have withdrawn as much as EUR700 million from the nation’s banks since the outcome of the elections further added to the gloomy environment.
Although gold’s appeal as a safe haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal.
A weakening euro and stronger dollar have weighed on gold instead. The euro dropped to a fresh four-month low against the U.S. dollar, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.37% to trade at 81.74, the highest since January 16.
According to market participants, gold prices could come under further selling pressure in the near-future, amid an uncertain technical picture. Technical traders expect the next level of support for gold to be at USD1,523 and then USD1,510 after breaking below key support levels last week.
Some market participants noted that heavy losses in stocks and other commodities markets accelerated gold’s sell-off, as traders were forced to sell their gold holdings to raise cash to cover losses elsewhere.
Money managers in gold futures and options cut their net long positions by 20% to the lowest level since December 2008, as investors aggressively unwound their bullish bets in the precious metal after a sharp price pullback.
In October 2008, gold prices tumbled 18% as turmoil in global financial markets led to losses in global equity and commodity markets. The precious metal rallied 23% in the next two months.
Elsewhere on the Comex, silver for July delivery plunged 3% to trade at USD27.23 a troy ounce, the lowest since December 29, while copper for July delivery dropped 1.65% to trade at USD3.459 a pound, the lowest since January 10.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,530.85 a troy ounce during early European trade, tumbling 1.7%.
It earlier fell by as much as 1.95% to trade at USD1,526.95 a troy ounce, the lowest since December 29, 2011.
Gold futures were likely to find support at USD1,510.45 a troy ounce, the low from July 6, 2011 and resistance at USD1,585.65, the high from May 14.
Gold futures have been on a rapid decline since the outcome of the May 6 elections in Greece threw the future of the country’s international bailout deal into doubt and fuelled fears over a possible Greek exit from the euro zone.
Speculation over the possibility of a Greek exit from the euro zone intensified on Tuesday, as talks aimed at forming a coalition government failed.
A caretaker government will be appointed later Wednesday, with new elections likely in early June, fuelling fears over a potential Greek default and eventual exit from the euro zone.
Reports that Greeks have withdrawn as much as EUR700 million from the nation’s banks since the outcome of the elections further added to the gloomy environment.
Although gold’s appeal as a safe haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal.
A weakening euro and stronger dollar have weighed on gold instead. The euro dropped to a fresh four-month low against the U.S. dollar, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.37% to trade at 81.74, the highest since January 16.
According to market participants, gold prices could come under further selling pressure in the near-future, amid an uncertain technical picture. Technical traders expect the next level of support for gold to be at USD1,523 and then USD1,510 after breaking below key support levels last week.
Some market participants noted that heavy losses in stocks and other commodities markets accelerated gold’s sell-off, as traders were forced to sell their gold holdings to raise cash to cover losses elsewhere.
Money managers in gold futures and options cut their net long positions by 20% to the lowest level since December 2008, as investors aggressively unwound their bullish bets in the precious metal after a sharp price pullback.
In October 2008, gold prices tumbled 18% as turmoil in global financial markets led to losses in global equity and commodity markets. The precious metal rallied 23% in the next two months.
Elsewhere on the Comex, silver for July delivery plunged 3% to trade at USD27.23 a troy ounce, the lowest since December 29, while copper for July delivery dropped 1.65% to trade at USD3.459 a pound, the lowest since January 10.