Gold dropped to a four-month low in London on concern that turmoil in Greece will strengthen the dollar and curb demand for the metal as an alternative asset. Other precious metals reached the lowest levels since January.
The euro neared a three-month low versus the dollar as Greek politicians struggle to form a new government, raising concern that the nation may leave the currency bloc. Commodities plunged to the lowest level this year yesterday as global equities slid to a three-month low.
“We expect the downtrend to be continued as the failure to shape a Greek government stirs up anxiety about the future of the euro zone,” analysts at Hyderabad, India-based Karvy Comtrade said in a report today. “The euro is therefore likely to remain under pressure.”
Bullion for immediate delivery fell as much as 1.5 percent to $1,581.10 an ounce, the lowest price since Jan. 3, and was at $1,582.40 by 11:11 a.m. in London. June-delivery futures were 1.4 percent lower at $1,582.80 on the Comex in New York.
Gold at the morning “‘fixing,’’ used by some mining companies to sell output, fell to $1,585.50 an ounce in London from $1,602.50 yesterday afternoon. The plunge has pared this year’s gain to 1.2 percent, after the metal advanced for 11 consecutive years. Gold reached an all-time high of $1,921.15 in September.
Alexis Tsipras, whose Syriza party placed second in Greek elections on May 6, said he would forge ahead with plans to form a coalition government of left-wing parties after he was handed the mandate by President Karolos Papoulias.
Antonis Samaras of New Democracy and Evangelos Venizelos, the former finance minister who leads Pasok, rejected an ultimatum from Tsipras to send a letter to the European Union revoking their written pledges to implement austerity measures by the time he meets them today. Another election may be held in mid-June if politicians fail to form a governing coalition.
Silver for immediate delivery dropped as much as 2.5 percent to $28.7025 an ounce, the lowest price since Jan. 9, and was last at $28.835. Palladium slid as much as 1.2 percent to $614.50 an ounce, the lowest since Jan. 10. The eight-day drop is the longest losing run since September 2008.
Platinum fell 0.7 percent to $1,501.25 an ounce. It slipped to $1,500.89, the lowest level since Jan. 17, and is the best performing precious metal this year with a gain of 7.2 percent.