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Bailout for Cyprus Reduces Haven Demand, Gold Falters

March 25, 2013 at 20:23 by Vladimir Vyun

Gold fell today after Cyprus reached a bailout agreement with the European Union. Such deal reduced demand for the precious metal as a safe haven. Gold was rising last week amid fears of a financial crisis in the European nation. The country is small, but important nevertheless because of its banking system, which attracts capital from all over the world.

Markets were rejoicing after the news and riskier assets, including most commodities, rallied. The Standard & Poor’s GSCI Index of raw materials climbed as much as 1.1 percent. Yet optimism quickly started to wane and traders were losing appetite for risk. This means gold may yet resume its rally.

June futures for delivery of gold dropped $3.20 (0.17 percent) to $1,605.20 per troy ounce as of 20:17 GMT on COMEX today. Earlier, the contract touched $1,590.40, the weakest price since March 18.

If you have any questions and comments on the commodities today, use the form below to reply.

2 Responses to “Bailout for Cyprus Reduces Haven Demand, Gold Falters”

  1. steve bank

    Demand is no longer the issue with the price of gold; Not only is there an oversupply, but the dollar has been historically weakened, giving the metal a higher figure. If ‘risk’ loses its appeal, the euro returns from an inflated value, and currencies gain, the price of the metal will continue heading lower.

    [Reply]

    enivid Reply:

    What do you mean by “the euro returns from an inflated value”?

    [Reply]

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