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Gold Tumbles Into Bear Market on Concern Greece May Leave Euro
By Phoebe Sedgman and Glenys Sim | Bloomberg – 6 hours ago

Gold entered a so-called bear market, dropping for a fourth day, after Greek leaders failed to form a government, increasing speculation that the country may quit the euro and driving the Dollar Index (DXY) to a record advance.

Immediate-delivery gold lost as much as 0.7 percent to $1,533 an ounce, more than 20 percent below its all-time high last September and fulfilling the common definition of the market slump. That's the cheapest since Dec. 29. The precious metal traded at $1,535.75 at 2:01 p.m. in Singapore.

A second Greek vote will be held, possibly next month, as gridlock followed a May 6 ballot in which voters rejected the austerity program that underpins the country's bailout accords. German Finance Minister Wolfgang Schaeuble called the new election a referendum on whether Greece stays in the euro.

"It's a risk-off environment," Peter Hickson, head of commodities research at UBS AG, said in a Bloomberg Television interview. "People are concerned about liquidity and they're going to take security in the U.S. dollar."

Since peaking at $1,921.15 an ounce last year, spot bullion has exceeded the 20 percent decline twice before, in both September and December, and is 1.8 percent lower in 2012 after gaining for the past 11 years.

June-delivery bullion lost as much as 1.6 percent to $1,532.70 an ounce in New York, declining more than 20 percent from its record. Futures have also dropped into a bear market twice since reaching the record last year.
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The Dollar Index, a six-currency gauge, climbed for a 14th day, the longest winning run since its inception in 1973. The euro dropped to $1.2699, the weakest since Jan. 17.

Holdings in gold-backed exchange-traded products fell 0.1 percent to 2,379.367 metric tons yesterday, according to data tracked by Bloomberg. Investor George Soros increased his holdings in the SPDR Gold Trust in the first quarter, while John Paulson maintained his stake, filings showed yesterday.

Spot gold's so-called 14-day relative strength index dropped to 21.07, below the level of 30 that some analysts regard as signaling a rebound. One ounce of gold bought as much as 56.0702 ounces of silver today, the most since Jan. 9, according to Bloomberg data.

Spot silver fell as much as 1.3 percent to $27.36 an ounce, the lowest level since Dec. 30, and was at $27.4675. It's the metal's eighth decline, the worst run since Sept. 11, 2008.

Platinum, the only precious metal still higher this year, was little changed at $1,431 an ounce after dropping to $1,430.75, the lowest level since Jan. 10. Palladium dropped as much as 0.6 percent to $592.15 an ounce, before trading at $594.