Gold prices fall on hopes of debt solutions
NEW YORK (AP) -- Gold prices fell Wednesday on signs of progress toward resolving debt problems in the United States and Europe.
Gold for August delivery settled down $4.20 at $1,596.90 an ounce. It's the second consecutive day of lower prices after the metal topped $1,600 an ounce.
Investors are closely watching negotiations in the U.S. and Europe over debt issues. They are concerned that a failure to solve the problems could affect the global economy and potentially slow demand for many commodities, from oil to copper and grains.
There appears to be growing support in the U.S. for a bipartisan plan to reduce the deficit ahead of an Aug. 2 deadline to raise the nation's debt ceiling. A failure to raise the debt ceiling would mean the U.S. would default on its massive debt obligations, although many think that's unlikely.
European leaders will meet Thursday to discuss a plan to provide more financial aid for Greece, which is teetering on the brink of default. Its debt problems threaten to spread to other troubled economies in Europe.
Investors were encouraged by the developments and some opted to sell gold, analysts said. At the same time, the broader economic concerns kept pressure on prices for most commodities, which were mixed on the day.
"We just have some nervous markets whether you're talking bond markets, stock markets, commodities markets," energy analyst Jim Ritterbusch said. "They're just waiting for definition regarding debt talks on both sides of the Atlantic."
Copper prices also were affected by a drop in sales of previously occupied homes in June to an annual rate of 4.77 million, according to the National Association of Realtors. Copper is used in wiring, pipes and construction products.
Investors also are concerned about the prospect of slower growth in China, which is a huge importer of copper.
"We certainly see some headwinds for copper moving forward," said Dave Meger, vice president of metals trading at Vision Financial Markets. "Yet, we still feel that demand is strong enough and commodities are strong enough that we have expectations for copper prices to continue to move higher."
Copper for September delivery fell 3.2 cents to settle at $4.436 a pound. September silver dropped 66.3 cents to settle at $39.558 an ounce, October platinum fell 20 cents to $1,776.10 an ounce and September palladium dropped $4.65 to $793.65 an ounce.
Oil and other energy products were mostly higher. Benchmark crude for September delivery rose 54 cents to settle at $98.40 a barrel on the New York Mercantile Exchange.
In other Nymex contracts, heating oil gained 2.04 cents to settle at $3.1184 per gallon, gasoline rose 3.21 cents to $3.147 per gallon and natural gas fell 4.2 cents to $4.469 per 1,000 cubic feet.
In agricultural trading, September wheat rose 3.5 cents to settle at $6.97 a bushel, December corn fell 9.5 cents to $6.7775 a bushel and November soybeans rose 2 cents to $13.84 a bushel.
Copyright 2011 The AP.