Gold futures slipped in value on Monday, tracking the downward trend of the shared currency of the European Union in the fallout of weekend elections in France, Greece and elsewhere in Europe, according to published reports.
Reuters reports Greek voters' animosity toward austerity measures was demonstrated over the weekend when they stood opposed to the country's efforts to prevent additional damages inflicted by the sovereign debt crisis. Voters sided with anti-austerity political parties and abandoned parties that have implemented the measures that attempt to shield the nation from the debt scourge.
In France, Francois Hollande, a Socialist candidate, unseated incumbent Nicolas Sarkozy on Sunday and analysts are keeping an eye on how he will work with Germany, as the two nations host the euro zone's largest economies and typically speak from a bully pulpit on economic issues in the region.
"Gold opens the week lower with investors in risk-off mode after this weekend's election. Stocks are weaker, the euro is losing ground and, since gold is currently considered a riskier asset, it is also losing ground," trader Alexander Zumpfe with precious metals house Heraeus told Reuters, noting some acquisitions of the yellowish metal were tempering its losses. "We saw some physical buyers coming back this morning."
At 1 p.m. on Monday, gold futures fell 0.32 percent, a $5.20 drop to $1,640 per troy ounce.
In addition to the euro feeling the pinch, high-risk assets – like stocks and commodities – also were under pressure of the political situation in the euro zone.
Stocks in Europe fell to their lowest value in about 18 weeks while futures for German Bunds scaled to their all-time highs.
Though the wobbly financial and economic situation in the euro zone was partially responsible last year for pushing the yellowish metal toward record highs, the U.S. dollar, Bunds and Treasuries issued by the U.S. presently are drawing investors' attention as preferred havens. The record price of gold futures of $1,923.70 per troy ounce was established on September 7, 2011.
From late Friday to Monday morning, the U.S. dollar index gained from 79.617 to 79.468. The metric gauges the strength of the world's reserve currency when compared with competing monetary units.
The dollar's gains applied pressure to commodities since it makes them more costly for investors who are dealing with monetary units other than the greenback.
"A firmer U.S. dollar, which rose significantly against the euro in the wake of the elections in France and Greece at the weekend, is weighing on [the gold] price this morning," states a Monday note authored by analysts with Commerzbank, according to MarketWatch.
Dow Jones Newswires reports Monday's losses to bullion ran contrary to the performance from this past Friday, when bullion climbed after employment data released by the U.S. Department of Labor demonstrated results that were weaker than anticipated.
The news source noted currency markets were less active on Monday, which did not provide a motive for investors to upgrade or pull back investment.
One analyst noted that Hollande's victory in France was not a strong enough development to spur markets.
"We definitely need something more dramatic," analyst Frank Lesh with FuturePath trading told the news source. "Gold has lost some of its safety allure at the moment."
German Chancellor Angela Merkel, whose party was dealt a blow in the northernmost state of the nation she leads, said she and Hollande would convene and continue to demonstrate strong relations between the countries.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.