Gold prices dropped for the first time in three days as worries eased over the likelihood of banking problems in Portugal triggering a wider debt distress in Europe, reducing the metal’s appeal as an optional investment.
Banco Espirito SA moved to ease investor concerns after a parent company failed to repay short-term notes. Goldman Sachs Group Inc. wrote in a note that foreign lenders are little exposed to Portugal and the European Central Bank is prepared to protect banks, indicating that Santo’s woes are unlikely to spread further in the region. Gold prices hit a 16-week high on Thursday.
“There is a slight pullback in gold as the problem in Portugal did not escalate. There is also some profit taking,” strategist Adam Klopfenstein of Chicago-based Archer Financial Services told Bloomberg in a telephone interview.
August-settlement gold futures traded at $1,337.40 per ounce as of 1:38 pm on the Comex in New York. Volume of shares that changed hands in was 26% lower than the average for the past 100 days at the time of the day.
Prices ascended 11% this year, topping increases for gauges of commodities, stocks and treasuries.
According to MarketWatch, Julian Phillips of GoldForecaster.com said the media is striving to emphasize that either the violence in Israel, Espirito Santo bank’s woes or safe haven demand from other areas have propelled recent gains in gold prices.
A Bloomberg survey showed that trades anticipate haven appeal in the wake of geopolitical conflicts to buoy gold prices next week.
In the meantime, the silver contract for September settlement retreated 0.2% to $21.461 per ounce on the Comex, after adding to trade at $21.63 on Thursday, the highest price for a most active contract since March 17.
September-delivery Palladium added 0.2% to $875.30 per ounce on New York Mercantile Exchange. The contract hit $877.75 yesterday.
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