Gold, Silver Drop on Concerns the Euro Has Further to Fall

Ask gold or silver traders when prices will bottom, and they may ask back: “When will the euro currency bottom?”

Gold and silver slumped again Thursday, depressed by concerns that the euro currency is headed to new lows. Near-term gold futures in New York fell $1.30 to a 13-month low of $264.90 an ounce.

Near-term silver futures slid 3.3 cents to $4.73 an ounce, the lowest in more than a year.

Metals prices weren’t helped by a slight rebound in the euro, which closed at 83 U.S. cents, up from Wednesday’s record low.

Because gold is priced in dollars worldwide, the dollar’s continuing strength against the euro, the Canadian dollar, the Australian dollar and other currencies this year is making the metal more expensive for potential buyers in those countries.

Silver, meanwhile, is following gold, as it often does.

However, Leonard Kaplan, president of Prospector Asset Management, suggested that gold is simply seeing too much selling pressure from various sources, including from technical traders who see too much risk in holding on.

“I still believe that gold is a captive of the dollar, but when it breaks support [levels], technicals reign supreme,” Kaplan said. Gold slumped $3.90 to $266.20 Wednesday, breaking through the $268 level, which had been a level that traders had been watching closely.

Kaplan said he believes that gold remains in a bear market and under these conditions, “any positive news is interpreted negatively or is ignored.”