Futures Market News
Gold futures react to positive economic news
Jul 26, 2010 01:44 PM
Rising home sales in the U.S. and relatively good news from the European bank stress tests which were completed Friday both put pressure on the price of gold. The yellow metal fell $6 on Monday to $1,181.80 per troy ounce.
While many still expressed skepticism about the usefulness of the euro-zone bank tests, the results were generally positive, with only seven banks failing. The test was designed to assess how major European banks would fare in the event of a dramatic drop in economic growth or in the value of their sovereign debt holdings.
The tests did not, however, assess the possibility of a complete or partial default by Greece, Spain or other troubled nations.
In the U.S., new home purchases gained 24 percent from May to June, to a seasonally adjusted annual rate of 330,000 sales. However, it's still the second slowest rate on record since the Department of Commerce began tracking the figures in 1963.
The global economic picture thus still appears weak, but with signs of improvement. Those signs were enough to encourage traders betting on further weakness to back out of the gold trade and take their profits.
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