Gold Prices Ease as Weakness In Euro Weighs on Metal; Silver Prices Also Lower

Gold prices continued to trade lower on Tuesday as political stalemate following Greece post elections results renewed concerns over sovereign debt crisis, weighing on euro and weakening the market sentiment. Meanwhile, silver prices are also down today.

At last check, Spot gold slid 0.1 percent to $1,636.20 an ounce. U.S. gold also dropped 0.1 percent to $1,636.90.

Commenting over gold’s continued loses, Li Ning, an analyst at Shanghai CIFCO Futures said to Reuters-CNBC, “The sentiment in gold is likely to remain weak for a while, after the changes in European governments again triggered worries about the bloc’s debt crisis and pressure the euro.”

According to Li Ning, the plunge in oil prices, which lost 7% so far this month, is also one of the reasons behind gold’s retreat as falling oil prices eased concerns over inflation thereby reducing some of the metal’s appeal as a safe haven instrument.

Bullion prices have been on a tight monthly spread for some time now. Since last two months, gold prices hovered between $1620 an ounce and $1680 an ounce level as unfavorable macroeconomic indicators weighing on top and bargain hunting buying supporting prices at the lower end.

“We see a small amount of physical buying on the downside, and probably more buyers will emerge if prices drop to the $1,600 level,” said one Hong Kong based trader to Reuters-CNBC.

Meanwhile the demand for physical gold can pick up in short term as India—world’s biggest importer of gold- scrapped excise duties from Jewelry it imposed in March. However, weakness in Indian rupee could still curtail the demand.

In its research note, ANZ bank wrote, “The doubling of the import duty (to 4 percent) remains (in India) – and together with a weak INR (Indian rupee), the pent up demand market participants are expecting, may still disappoint.”

Meanwhile, silver continued to its extend loses on Tuesday. At last check, silver lost 1.45%, at $29.68 an ounce.

In pre-market trading in New York, the iShares Silver Trust (ETF) (NYSE: SLV) is down 1.06%, the ProShares Ultra Silver (ETF) (NYSE: AGQ) is down 2.35%, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) is up 2.17%.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.