By Claudia Assis and Sara Sjolin, MarketWatch
Metal trims losses after worries about Spain roil markets
SAN FRANCISCO (MarketWatch) — Gold futures inched lower Monday, a fall cushioned by worries about Spain and the rising cost of its debt.
An employee prepares gold bars for transport in Switzerland.
Gold for August delivery GCQ2 +0.07% slipped $1.10, or 0.1%, to settle at $1,627 an ounce on the Comex division of the New York Mercantile Exchange.
The metal traded as low as $1,606.90 an ounce earlier in the day, according to FactSet Research.
Investors looked past Greece and some relief with election results there to worry about Spain and the rising cost of Spanish debt.
Yields on Spain’s 10-year bonds surpassed 7% on Monday, an euro-era high.
“Upwards of 7% seems to be the big deal that gets people panicked about,” said Michael Smith, with T & K Futures in Florida.
Gold is likely to enjoy some safe-haven flows in the short term on the concerns about Spain and also a lower dollar, he added.
The dollar index DXY +0.41% , which compares the U.S. unit to a basket of other currencies, recently stood at 82.001, up from 81.584 Friday.
The modest losses came on the heels of a strong week for gold futures, in which the benchmark contract rose 2.3% amid hopes for fresh easing from the world’s major central banks. Read more on last week’s gold action.
Gold is likely to trade between $1,680 to $1,700 over the next month, supported by the safe-haven flows and a lower dollar, Smith said.
Concerns about a possible Greek exit from the euro zone helped support gold the previous week, but such worries eased somewhat after the New Democracy party, which supports measures to keep the euro, won a narrow victory in Sunday’s election. Read more on Greek vote.
HSBC analysts said in a note ahead of the Greek election that, regardless of the outcome, they expected gold to move above $1,900 by year’s end, “based on the likely impact of easy monetary policy.”
“The possibility that the Federal Reserve and other central banks may loosen monetary policy later this year … is potentially supportive of gold, in our view. Government policies aimed at keeping real interest rates negative are especially positive for gold,” they said in the note.
The analysts also cited increased gold demand by central banks, but said this could be offset by higher scrap-gold supplies and lower jewelry demand.
Elsewhere in the metals complex Monday, silver followed gold lower, with the July contract SIN2 -0.16% off 7 cents, or 0.2%, to $28.67 an ounce, also trimming losses throughout the day.
July copper HGN2 +0.28% fluctuated between small gains and losses, ending the day modestly up. The contract rose 1 cent, or 0.4%, to settle at $3.396 a pound.
Platinum for the same month’s delivery PLN2 -0.22% turned lower, and finished the day off $3.10, or 0.2%, at $1,484.10 an ounce. Palladium for September was the outlier, up $2.75, or 0.4%, to $633.15 an ounce.