Gold futures sank to a six-week low this week, crossing back over the $1,200 per ounce line. The price of gold for August delivery fell $12.60 to $1,195.10 per troy ounce on the Comex in New York trading.
Global equities started the day strongly, although they declined as trading continued. U.S. stock index futures were buoyed by positive trends in Asia and Europe on Monday, which continued into Tuesday trading.
Another factor hitting the price of gold was the emphasis on austerity coming from many euro-zone countries. England, Ireland, Greece, and Germany have all cut back on public spending and made strong moves towards containing their deficits.
Investors buy gold to hedge against inflation or devaluation in paper currencies, and the continuing sovereign-debt crisis in Europe was fueling demand for the metal. Now that European governments appear to be tackling the problem of public balance sheets with renewed seriousness, the euro is gaining ground and pushing down the price of havens like gold and the U.S. dollar.
In addition, falling demand in India, where buyers of gold are put off by gold’s record high prices, is also undercutting its support.
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