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MTECHTIPS:-Gold drops as dollar gains on Spanish downgrade, global growth woes
Gold prices fell in Asian trading on Thursday after Standard & Poor's said it downgraded Spanish sovereign debt, which sent investors rushing to the safety of the dollar, gold's traditional hedge.On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 0.23% at USD1,761.05 a troy ounce, up from a session low of USD1,760.45 and down from a high of USD1,763.15 a troy ounce.Gold futures were likely to test support at USD1,758.85 a troy ounce, Wednesday's low, and resistance at USD1,769.85, Wednesday's high.Standard & Poor's said it lowered Spain's long-term credit rating to 'BBB-' from 'BBB+' and cut its short-term credit rating to 'A-3' from 'A-2'.The ratings agency said Spain's deepening economic recession is limiting the Spanish government's policy options and added that rising unemployment and spending constraints are likely to fuel social discontent and contribute to friction between Spain's central and regional governments."In our view, the capacity of Spain's political institutions (both domestic and multilateral) to deal with the severe challenges posed by the current economic and financial crisis is declining," Standard & Poor's said in a statement.The news sparked demand for the dollar, which sent gold dipping in the Asian session.Meanwhile, IMF statements pointing to the European debt crisis as the global economy's strongest headwind fueled a risk-off trading session that sent the dollar up and gold down.
Gold prices fell in Asian trading on Thursday after Standard & Poor's said it downgraded Spanish sovereign debt, which sent investors rushing to the safety of the dollar, gold's traditional hedge.On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 0.23% at USD1,761.05 a troy ounce, up from a session low of USD1,760.45 and down from a high of USD1,763.15 a troy ounce.Gold futures were likely to test support at USD1,758.85 a troy ounce, Wednesday's low, and resistance at USD1,769.85, Wednesday's high.Standard & Poor's said it lowered Spain's long-term credit rating to 'BBB-' from 'BBB+' and cut its short-term credit rating to 'A-3' from 'A-2'.The ratings agency said Spain's deepening economic recession is limiting the Spanish government's policy options and added that rising unemployment and spending constraints are likely to fuel social discontent and contribute to friction between Spain's central and regional governments."In our view, the capacity of Spain's political institutions (both domestic and multilateral) to deal with the severe challenges posed by the current economic and financial crisis is declining," Standard & Poor's said in a statement.The news sparked demand for the dollar, which sent gold dipping in the Asian session.Meanwhile, IMF statements pointing to the European debt crisis as the global economy's strongest headwind fueled a risk-off trading session that sent the dollar up and gold down.
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