Commodity Daily News

Gold Prices Back Below $1,500

Spot gold prices dropped to their lowest level in six weeks after closing Friday below the $1,500 mark. Demand for gold has fallen as increased optimism is apparent following a positive outcome in Greece and rising equity markets.

The declines in gold prices began to intensify following the approval of the Greek austerity measures by Greece's parliament and the passing of vote for asset sales and additional budget cuts. Improved US data points helped fuel stronger equity markets last week. This also contributed to the “risk-on” environment which does not favor gains for gold. US stocks surged last week with the Dow Jones Industrials Average climbing 5.4%, the index's best week percentage wise since July 2009. Investors should take the gains with a grain of salt; volumes were down last week from their average by almost 12.5% which may hints at a lack of follow-through in the equity markets. This would be a positive for spot gold prices. $1,514 and $1,557 would be the next targets to the upside though a break of the $1,4662 support would reduce the bullish sentiment in spot gold.