Gold Tracks The Vulnerable Euro On Worries From Spain

Precious-Gold fell from $1580, tracking losses in the euro, on worries from Spain`s fiscal woes after the rise in bond yield to unsafe levels.

The shiny metal tracked the drop in the euro which dipped to the lowest level in two years versus the dollar after the surge in Spain`s 10-year bond yield near 7% which is deemed unsustainable level which forced other euro area nations to ask for an international bailout.

The European common currency is girding for its biggest monthly drop since September on the back of the grim fiscal situation in Spain and political upheavals in Greece.  

Worries in Spain aggravated also after the spread between the Spanish government debt and German bunds climbed to record high, where IBEX index continued its drop on Tuesday after hitting nine-year low on Monday.

Also, Bank of Spain Governor Miguel Angel Fernandez Ordonez announced his resignation a month early amid a wave of criticism over the nationalization process of Bankia group which is suffering from bad loan provisions.

Although Spanish Prime Minister Mariano Rajoy said Spain was “finding it very difficult to finance itself,” raising speculations the government will not be able to shore up its ailing banking sector without asking for an international bailout, especially as Rajoy referred that the European rescue should be used for recapitalizing Spain as well as other ailing banks in the euro area directly.

Gold is currently trading around one-week low at $1547.24 an ounce after recording a high of $1555.50 and a low of $1545.54, where the shiny metal fell from strong resistance at $1580.00.  

Crude oil for July`s delivery is currently trading around $89.95 a barrel from the day`s opening of $90.87.

In the FX market, the U.S. dollar climbed for the seventh consecutive session against a basket of major currencies, where the dollar index is currently hovering around 82.65 compared to the day`s opening of 82.39.