Gold falls as worries build over Europe's crisis

AP News
|
Posted: Dec 06, 2011 3:44 PM
Gold falls as worries build over Europe's crisis

Gold prices fell a second day as the prospect of credit downgrades created more pressure for European leaders to agree on a plan to solve the region's financial crisis.

Standard & Poor's credit rating agency said Tuesday that it might cut the AAA rating of Europe's bailout fund, which has been used to help financially troubled countries such as Greece and Portugal. The fund may have to charge higher rates to help countries if it loses its AAA rating.

The credit rating agency's warning came a day after it threatened to downgrade debt ratings for 15 countries that use the euro, including Germany and France. That type of downgrade could affect efforts to restore investor confidence in Europe.

In addition, U.S. Treasury Secretary Timothy Geithner said the Federal Reserve has no plans to give money to the International Monetary Fund to bolster Europe's bailout fund.

Gold prices fell slightly after the developments. Copper and platinum also fell but silver, oil, wheat and corn ended the day higher.

Many investors are awaiting the outcome of a summit Friday where European leaders will debate the best way to restore confidence in the euro. Some have sold gold for a profit after a 4 percent increase last week. Others want to see if there will be an impact on demand for commodities from oil to industrial metals.

Commodities likely will rally if the leaders make positive comments after the meeting, CPM Group analyst Carlos Sanchez said.

Gold for February delivery fell $2.70 to end at $1,731.80 an ounce. March copper fell 4 cents to end at $3.5755 a pound and platinum fell $8.50 to $1,524 an ounce. March silver rose 37.2 cents to $32.744 an ounce and palladium rose $24.40 to $670.90 an ounce.

In energy trading, benchmark crude ended up 29 cents at $101.28 per barrel on the New York Mercantile Exchange. Heating oil rose 2.93 cents to $3.0217 per gallon, gasoline futures rose 3.17 cents to $2.6454 per gallon and natural gas rose 2.6 cents to $3.487 per 1,000 cubic feet.

Wheat for March delivery rose 1.5 cents to finish at $6.13 per bushel, March corn rose 5.5 cents to $5.965 per bushel and January soybeans rose 3.25 cents to end at $11.295 per bushel.