The downward drive of the precious metal on Monday reduced the price of gold to a seven-week low. Fitch Ratings and Standard & Poor's put European nations on notice regarding their credit rating on Monday, which pulled down the euro, pushed up the dollar, and lowered the price of the precious metal. The credit services' advisory came after a largely disappointing EU summit in Brussels last week.
"The price slide comes partly on the back of a very firm U.S. dollar," states a report authored by analyst Daniel Briesemann with Commerzbank in Frankfurt, according to Bloomberg. We "do not exclude the possibility of a further drop in the price of gold in the short term. That said, we are still convinced that gold can serve mid- and long-term as a store of value."
At 8:26 a.m. on Tuesday, gold futures rose 0.1 percent, a .10 cent lift to $1,668.30 per troy ounce.
The potential damage that credit rating reductions can cause to the markets is significant, according to Reuters. The hobbled region already is working on recovering from havoc caused by the sovereign debt scourge, so the credit rating slash would only augment regional troubles.
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