Shoshone Silver/Gold Mining Co., Inc. (fka SHSH)

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Spot Gold 1553.20, Silver 26.38, Silver Extend Losses on EU Caution
Jun 28, 2012 By Matt Day

--Comex August gold recently down $25.20, or 1.6%, at $1,553.20 a troy ounce
--Silver hits 2012 low, recently down 2.1% at $26.38 a troy ounce
--View that new central bank liquidity measures aren't imminent continues to weigh on metals

NEW YORK--Gold and silver extended their earlier losses Thursday, as traders bet that a closely watched meeting of European leaders this week wouldn't result in new liquidity measures that could increase demand for an inflation hedge.

The most actively traded gold contract, for August delivery, was recently down $25.20, or 1.6%, at $1,553.20 a troy ounce on the Comex division of the New York Mercantile Exchange. Futures fell as low as $1,550.80 a troy ounce, the lowest intraday price since June 1.

Silver also slumped, touching the lowest point since Dec. 29, before paring those losses. August-delivery futures recently traded down 2.1% at $26.38 a troy ounce.

Gold and silver were pressured Thursday by the view that though global economic growth has slowed and Europe's banking crisis remains a threat to the financial system, leaders in Europe and the U.S. are unlikely to imminently implement new crisis-fighting measures. Precious metals can gain when central banks or governments act to increase the flow of cash in the financial system, as investors seek a hedge from the inflation that can result.

"It's been the central bank liquidity measures that have been one of the major legs of support for the gold market," said Dave Meger, director of metals trading with Vision Financial Markets. "As you undermine one of those legs, it gets a bit wobbly."

Much of gold's moves this year have come in response to expectations on monetary policy. Futures have tended to rise when investors were betting that world central banks would take new steps to support growth, and retreated when it seemed bankers would stand pat.

Many market participants aren't expecting dramatic action to result from the two-day summit of European Union leaders scheduled to begin Thursday.

Economists at Barclays "expect the discussions to draw a roadmap for fiscal, financial and political union, but do not anticipate any major decisions on concrete short-term measures to reduce market stress beyond what has already been agreed," Barclays analyst Suki Cooper said in a note.

Gold has struggled at times this year when euro crisis worries escalated. The potential for a financial freeze in the currency union has made some investors more comfortable holding cash instead of precious metals futures, and economic fears have sparked investment into the perceived safe haven of the U.S. dollar.

A rising dollar can dent demand for gold by limiting investor appetite for a hedge against declines in the currency. The dollar rose again against the euro Thursday, hitting its highest point since June 8.

Write to Matt Day at [e-mail]
(END) Dow Jones Newswires
06-28-12 1129ET
Copyright (c) 2012 Dow Jones & Company, Inc.

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