By Frank Tang
NEW YORK, July 23 (Reuters) – Gold slipped on Monday as
Spain’s economic troubles fueled euro zone debt fears, but
safe-haven bids pulled bullion off session lows, as it
outperformed equities and other commodities.
Gold came under early pressure from tumbling U.S. equities
and crude oil after Spain said it sank deeper into recession in
the second quarter. Many investors worried the euro zone’s No. 4
economy was closer to seeking a full bailout.
Gold pared losses as the euro rebounded after the
International Monetary Fund said it would start discussions with
the Greek authorities on July 24 on how to bring Greece’s
economic program back on track.
Last week, worries about a global economic slowdown and
deflation sent bullion slumping toward $1,560 an ounce several
times, but gold held above that level. The metal has been moving
in a range between $1,527 and $1,655 in the past three months.
“When gold gets down to a certain range around $1,550-60,
investors often consider it a safety play and an inexpensive
hedge in their portfolios,” said Phillip Streible, senior
commodities broker at futures brokerage R.J. O’Brien.
“Plus, a lot of people think that weaker global cues are
going to entice the Fed to embark on another quantitative easing
plan, so gold’s downside is somewhat limited,” Streible said.
Spot gold was down 0.5 percent at $1,576.10 an ounce
by 3:18 p.m. EDT (1918 GMT).
U.S. COMEX August gold futures settle down $5.40 at
$1,577.40 an ounce, with trading volume in line with its 30-day
average, preliminary Reuters data showed.
Bullion was dragged down by a more than 3 percent drop in
Brent oil and a one-percent fall in the S&P 500
amid European economic worries. U.S. Treasury yields fell to new
European debt fears sent global markets lower after a second
Spanish region requested help from the central government to
keep it afloat, as media reported half a dozen local authorities
were ready to follow in the footsteps of Valencia.
By Frank Tang