Gold prices recovered much of their early losses on Monday as appetite for higher-risk assets, which followed a victory for pro-bailout parties in Greek elections, dwindled and the euro and Spanish and Italian stocks and bonds fell.
The metal was still down for the first session in seven after the election dampened talk that Greece was set to exit the euro zone. But pessimism over the euro debt crisis quickly returned.
Assets seen as safer such as German government bonds and the dollar recovered from lows, while stocks, the euro and hard commodities pared gains.
Spot gold was down 0.2% at $1,624.04 an ounce at 0559 EDT, off an early low of $1,606.49. U.S. gold futures for August delivery were down $3.50 at $1,624.60.
"The battle has been won, but the war is far from over," Commerzbank analyst Eugen Weinberg said. "That's what the markets seem to be looking at this morning already, with the rally proving to be very short-lived. One would have expected it to last for at least the next couple of days."
"It seems the market is still in a negative mood, so we are still expecting the slide on the commodity markets to continue. This is definitely helping gold."
Safe-haven German bunds recovered from lows, while 10-year Spanish government bond yields hit euro-era highs above 7% on persistent worries about Spain's fiscal and banking problems. . .View Full Article