European financial crisis tempers gold price gain

AP News
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Posted: Jun 11, 2012 4:42 PM
European financial crisis tempers gold price gain

The price of gold rose slightly Monday after a rescue loan for Spain did little to alleviate investor concerns about a long-term solution to Europe's financial crisis.

Gold for August delivery topped $1,600 an ounce early Monday but ended at $1,596.80 an ounce, which was a gain of $5.40 from Friday's closing price.

Leaders of European countries have agreed to lend Spain up to $125 billion to help its troubled banking system. Spain is the fourth European country after Greece, Portugal and Ireland to request financial help since the debt crisis began.

Analysts expect the price of gold and other commodities to fluctuate ahead of an election Sunday in Greece that could determine whether it will remain in the group of countries that use the euro currency.

Traders are unsure how the outcome of the election will affect Europe's broader financial problems, the slowing global economy and demand for commodities. The U.S. and China already are coping with slower economic growth.

"We have, you know, heightened headline risk, and when you have that, that becomes a real problem," said Sterling J. Smith, vice president of commodity research at Citibank Institutional Client Group. "I kind of think the market is being a bit fickle here."

In other trading, industrial metals rose after China's exports rose 15.3 percent in May from May 2011. Imports rose 12.1 percent. However, China said that exports in the first five months to the European Union _ its biggest trading partner _ fell 0.8 percent from the same period in 2011.

The numbers are important because China is a huge importer of commodities. Its government has been working to reverse its economic slowdown by boosting lending, investment and spending on public works.

Copper for July delivery rose 5.8 cents to finish at $3.343 per pound, July platinum gained $24.20 to $1,449.30 an ounce and September palladium increased $13.15 to $625.15 per ounce. July silver ended up 14.5 cents at $28.616 per ounce.

Benchmark oil fell $1.40 to finish at $82.70 per barrel, heating oil dropped 3.64 cents to $2.6357 per gallon, gasoline decreased 2.86 cents to $2.6566 per gallon, and natural gas fell 8.1 cents, or 3.5 percent, to $2.218 per 1,000 cubic feet.

In July agricultural contracts, wheat rose 0.25 cent to finish at $6.305 per bushel, corn fell 6 cents to $5.92 per bushel and soybeans dropped 1.5 cents to $14.2475 per bushel.