Gold drops as court backs German bailout efforts

AP News
Posted: Sep 07, 2011 4:25 PM
Gold drops as court backs German bailout efforts

Gold prices fell sharply Wednesday after a German court supported that country's efforts to help its financially troubled neighbors.

The court ruled that Germany's decision to participate in the financial bailout of Greece and to help establish a financial rescue fund for other countries last year was legal. Germany has been the biggest contributor of loan guarantees to troubled nations like Greece.

The decision increased optimism that Europe's persistent sovereign debt problems could be closer to getting resolved. Investors sold gold for a profit after its recent run-up and moved money into other markets such as stocks.

Gold also was hurt by a new report that showed German industrial production increased 4 percent in July after falling 1.1 percent in June.

Gold fell $55.70, or 3 percent, to end at $1,817.60 an ounce. It's still up 28 percent this year.

In other trading, cotton prices jumped after the U.S. Agriculture Department said crop conditions deteriorated across the growing region last week.

About 28 percent of the crop was in good-to-excellent condition, compared with 30 percent the week before, the agency said. A year ago, about 60 percent of the crop was in good-to-excellent condition.

Penson/FCG analyst Sharon C Johnson said in an email that demand also is improving for cotton, particularly from China.

Cotton for December delivery rose 4 cents, or 3.8 percent, to $1.1034 per pound.

Oil prices rose 3.9 percent on speculation that Gulf of Mexico production could be affected by tropical storms. That, in turn, would cause tighter world supplies.

Benchmark West Texas Intermediate crude rose $3.32 to finish at $89.34 per barrel on the New York Mercantile Exchange.

In other energy trading, heating oil rose 6.54 cents to end at $3.0756 per gallon, gasoline futures increased 8.54 cents to $2.908 per gallon and natural gas rose 0.2 cent to $3.94 per 1,000 cubic feet.

Metals were mixed. In December trading, copper rose 7.6 cents to finish at $4.132 a pound and silver fell 23.7 cents to $41.631 per ounce. October platinum dropped $29.50 to finish at $1,828.70 an ounce while December palladium rose $3.15 to $752.70 an ounce.

Wheat, corn and soybeans all finished lower. December wheat fell 8.5 cents to end at $7.515 per bushel, December corn dropped 7.75 cents to $7.48 per bushel and November soybeans fell 1.75 cents to $14.2075 per bushel.