Gold futures ended sharply lower for a fourth straight day to settle at a 10-month low Wednesday, with the dollar continuing to rise as investors shunned risk assets even as Greece's financial troubles seem to grow. Gold prices dived with continued sell-off in commodities linked to the crisis in Greece.
Adding to the woes of the troubled eurozone nation were news reports that the European Central Bank would cut off funding to Greek banks, which further impacted gold prices. Nonetheless, there were other reports that the ECB would continue to support the Greek banking system. Worries persisted over the outcome of the fresh elections in June, with reports of significant bank withdrawals in Greece putting more pressure on its banks.
Gold for June delivery, the most actively traded contract, shed $20.50 or 1.3 percent to close at $1,536.60 an ounce Wednesday on the Comex division of the New York Mercantile Exchange. This was the lowest level gold traded since early July 2011.
Gold traded at an intraday high of $1,552.20 an ounce and a low of $1,526.70 an ounce.
Gold for June delivery, the most actively traded contract, lost $22.50 to $1,534.60 an ounce, levels not seen since early July 2011.
Yesterday, gold prices ended lower to settle at a near five-month low, as the dollar continued to strengthen while the euro slipped further on political developments in Greece. The troubled nation seem to be likely heading for new elections in June after failing to reach an agreement on a new coalition government.
The euro traded lower against the dollar at $1.2721 on Wednesday, as compared to $1.2730 late Tuesday. The euro scaled a high of $1.2758 intraday and a low of 1.2682.
The dollar index, which tracks the U.S. unit against six major currencies, was trading higher at 81.351 on Wednesday, from 81.286 in North American trade late Tuesday. The dollar scaled a high of 81.57 intraday and a low of 81.18.
In economic news, a report from the U.S. Commerce Department showed housing starts rose 2.6 percent to an annual rate of 717,000 in April from the revised March estimate of 699,000. Economists expected housing starts to increase to 690,000 from the 654,000 originally reported for March. Building permits fell 7.0 percent to an annual rate of 715,000 in April from the revised March rate of 769,000. Building permits, which are seen as an indicator of future housing demand, was expected to drop to 725,000 from the 747,000 originally reported for March.
The eurozone annual inflation for April was confirmed at 2.6 percent, down from 2.7 percent in March, final data from Eurostat showed. Nonetheless, inflation continues to stay above the European Central Bank's target, but close to 2 percent. Monthly inflation was 0.5 percent in April.
Elsewhere, the Bank of England said prospects for U.K. growth remain unusually uncertain. U.K. economic growth is set to remain subdued, while inflation is projected to be somewhat higher than expected three months ago, Bank of England said in its quarterly Inflation Report published today.
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