Gold prices hit the lowest level of the year Wednesday as uncertainty about Europe's political and economic future dominated world financial markets.
Gold for June delivery dropped $10.30 to finish at $1,594.20 an ounce, which was the lowest price since Dec. 30 when it ended at $1,566.80 an ounce.
Gold prices have fallen three consecutive days as Europe's debt crisis took center stage again. Borrowing rates increased in Italy and Spain. That added to pressure on the market created when supporters of tough spending measures designed to curb debt were removed from office in weekend elections.
Investors are worried that the unsettled situation will affect the Europe's recovery and perhaps hurt the global economy. Some sold gold to have cash accessible in case other buying opportunities occurred. Others cashed in after buying contracts on a bet that the price would fall, said George Gero, a vice president at RBC Global Futures.
In addition, the dollar has been stronger against other currencies. Gold and other commodities are priced in dollars so a stronger dollar makes them more expensive for traders using other currencies, such as the Japanese yen.
Until there is some clarification about the situation in Europe, many analysts expect commodities to remain under pressure.
May silver fell 21.7 cents to finish at $29.197 per ounce, May copper dropped 1.6 cents to $3.6695 per pound, July platinum declined $9.10 to $1,499.20 an ounce and June palladium decreased $9.20 to $613.65.
In other trading, grains and beans fell largely because of Europe's issues. Some investors were adjusting their portfolios ahead of the U.S. Agriculture Department's latest estimate of world supplies and demand, which is due Thursday, Telvent DTN analyst John Sanow said.
In July contracts, wheat fell 15 cents to finish at $6 per bushel, corn dropped 15.75 cents to $6.0725 per bushel and soybeans declined 8 cents to $14.3025 per bushel.
Benchmark oil fell 20 cents to end at $96.81 per barrel on the New York Mercantile Exchange. Heating oil rose 0.9 cent to $2.9991 per gallon, gasoline futures increased 2.97 cents to $3.0241 per gallon and natural gas ended up 7.2 cents at $2.465 per 1,000 cubic feet.