Gold prices slipped below $1,225 an ounce while futures for August delivery fell more than $5 to $1,224.70 an ounce as investor risk tolerance rose on strong export news from China. There is also a growing feeling that the euro has been oversold and is due for a a recovery. Thursday’s auction of Spanish debt was well received providing further evidence that the euro is entering a more stable phase.
“If you look at a chart of the euro, it’s been punished quite severely for some time now, and it is not unreasonable to believe that it will have a bit of a bounce along the way,” said Simon Weeks, head of precious metals at the Bank of Nova Scotia.
“We are seeing an interim consolidation, with the euro recovering a bit and gold down a bit. Overall I would expect the euro to turn lower again and gold to turn higher, but it is not going to be a one-way street.”
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