Gold News & Info

Source: American Gold Exchange

Austin— Gold fell 1.9% and silver 2.7% as renewed fears of default in Greece sent global equities plunging. The Dow suffered its worst day of the year, dropping more than 200 points, and precious metals were caught in the downdraft as investors sought liquidity. A rising dollar added to the pressure on gold, which closed below $1,700 for the first time in six weeks but remains up 6.7% this year. Silver is also at a six-week low. Platinum and palladium, being more industrial metals, were hit harder today, dropping 3.1% and 5%, respectively.

At the close: April gold lost $31.80 to $1,672.10; May silver dropped 91 cents to $32.78; April platinum shed $50.70 to $1,611.90; and June palladium lost $35.35 to $671.60 an ounce.

Fresh anxiety over the eurozone sovereign debt crisis spooked the markets as Greece threatened to default on bondholders who do not participate in the 206 billion euro debt restructuring agreed to yesterday. The holdouts, mostly hedge funds and foreign banks that expected preferential treatment, are threatening litigation to stop the bond swap, which officials say is crucial to avert catastrophe in Greece and contagion throughout Europe. The International Institute of Finance (IIF), which helped to broker the agreement, issued a confidential report today that chaotic default in Greece would spread throughout the eurozone at a cost exceeding a trillion euros.

Most analysts see recent losses in gold and silver to be overdone. Morgan Stanley told its clients to stay long on gold despite the corrections, expecting new record highs this year. The investment behemoth sees higher gold because of four reason: reductions in producer hedging, rising purchases by emerging market central banks, declining mine production, and the long-term growth of physical investment demand. In addition, Morgan Stanley's chief U.S. economist, Vincent Rheinhart, says there's 50-50 probability of QE3 before June, which would add more fuel to a rising gold price.