Gold prices slip as euro wobbles
Gold prices rose last week amid instability in Italy and Greece. Uncertainty remains in Europe, but now gold prices are falling as the effects of the crisis ripple outward.
The outlook for resolving Europe's debt crisis improved last week after new governments formed in both Greece and Italy tasked with reducing those countries' debt burdens. The sovereign debt crisis in Europe has increased the risk that countries might default on their loans, which would cause big losses for European banks.
Concerns about the crisis were renewed Monday after the Italian government had to pay a high interest rate in a debt auction. Investors demanded a 6.39 percent rate on five-year bonds, the highest rate since 1997. That indicates investors are still unsure of the country's ability to pay its debt. Just a month ago, interest rates on the same type of bonds were 5.32 percent.
In Greece, Prime Minister Lucas Papademos said Monday he the country is likely to miss its deficit reduction target this year.
Uncertainty over the fate of Greece and Italy caused the euro to call against the dollar. The common currency was worth $1.36 in afternoon trading, down from $1.3747 late Friday.
Gold for December delivery fell $9.70, or less than 1 percent, to settle at $1,788.40 per ounce Monday. Silver prices also fell. While silver is used as a raw material for manufacturing, many investors also buy the precious metal to protect against inflation. December silver lost 65.8 cents to close at $34.024 an ounce.
In other trading, energy prices and crops ended mostly lower on concerns that instability in Europe would hinder economic growth and cut demand for food and metals.
Copper for December delivery rose 2.45 cents, or nearly 1 percent, to close at $3.488 per pound. December palladium gained $1.50 to close at $664.30 an ounce. January platinum fell $2.60 to $1,644.10 an ounce.
Crops were mostly lower, except for soybeans. Corn for December delivery dropped 5 cents to settle at $6.335 per bushel. December soybeans gained 2.75 cents to $11.7825 a bushel. December wheat lost 1 cent to finish at $6.1575 per bushel.
Benchmark crude oil fell 85 cents to end at $98.14 per barrel on the New York Mercantile Exchange.
Heating oil fell 0.94 cents to finish at $3.1622 per gallon, gasoline futures lost 6.85 cents to close at $2.5353 per gallon and natural gas fell 9.6 cents to close at $3.60 per 1,000 cubic feet.