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Gold & Oil Lose Support from Risk Premium

July 11, 2014 at 20:23 by Vladimir Vyun

Both gold and crude oil fell today as their supporting factor, namely risk premium, waned. While losses of gold were small, the drop of crude was very big, sending the price for the West Texas Intermediate grade below the $101 level.

Gold retreated on speculations that fears about the European banking sector were exaggerated. Specialists argued that investors have limited exposure to Portugal, and the European Central Bank is ready to step in to help Portugal’s banks, which were the major source of concern. Without fear that drove speculators to gold, many traders decided that it is safer to take profit after yesterday’s rally.

Oil price resumed its decline as market participants continue to speculate that the conflict in Iraq does not have an impact on supply. On top of that, Libya more than doubled its output from a month ago to 350,000 barrels per day.

August futures for gold slipped 0.02 percent to $1,338.90 per troy ounce as of 20:15 GMT on COMEX today. Contract for delivery of WTI crude dropped 2.16 percent to $100.71 per barrel on NYMEX today. Brent grade of crude lost 1.98 percent to $106.52 per barrel on ICE.

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

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