Gold Prices Inch Lower as Uncertainty Over Greece Spooks Investors; Silver Prices also Lower

Gold Prices extended losses on Wednesday as euro tumbled amid rising uncertainty surrounding Greece’s exit from the euro-zone. EU leaders’ informal summit in Brussels failed to assuage investors’ concerns over the deteriorating financial health of the currency bloc. Silver prices have also fallen sharply today.

Euro hit a twenty one month low against the dollar on Wednesday.

With euro under pressure, investors turned to dollar and German Bunds- as most riskier assets like stocks, oil and other commodities fell amid rising fear over euro zone debt crises – which is also threatening fragile global economic recovery.

At last check, spot gold edged lower 0.1 percent at $1,555.50 an ounce while U.S. gold futures slipped 2.06%, trading at $1544.20 an ounce.

Commenting over gold’s prices possible course of movement, Daniel Smith, an analyst at Standard Chartered Bank said to Reuters, “The most likely scenario is there will be some kind of progress around the Greek situation, and therefore, these markets will rebound once this happens. But no one knows exactly what the timing is and that is the problem.”

The informal European leaders’ summit set for Wednesday is likely to discuss growth-boosting proposals alongside an idea to float a euro-zone bonds-underwritten by all euro zone countries.  While French President Francois Hollande supports the bond proposal, German Chancellor Angela Merkel is opposed to any such move.

Meanwhile in U.S., speculators foresee a bearish phase for bullion. According to a data provided by Reuters, most open interest, which reflects investor positioning, is placed at $1,550.00 and $1,600.00, with a firm bias towards bearish bets on future price movement.

The freefall was also seen in other precious metal markets as well. Silver dropped 1.8 percent at $27.62 an ounce, while spot platinum slid 1.2 percent at $1,421.25 an ounce and spot palladium edged down 0.7 percent at $602.22 an ounce.

The iShares Silver Trust (ETF) (NYSE: SLV) is currently trading 3.26% lower at $26.45, the ProShares Ultra Silver (ETF) (NYSE: AGQ) is currently trading 6.39% lower at $38.12, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) is currently trading 6.19% higher at $71.53.

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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.