EU Debt Crisis Strengthens Dollar; Gold Drops

Bloomberg reported the drop in the price of gold to $1,584.20 an ounce, upon speculation that Europe’s debt crisis will stenghten the dollar.

As quoted in the report:

The euro fell to near a two-year low versus the dollar after German Chancellor Angela Merkel said yesterday she hasn’t softened her stance on measures to stem debt contagion that’s prompted five euro states to seek international aid. Federal Reserve Chairman Ben S. Bernanke will discuss the outlook for the economy and monetary policy in testimony to the U.S. Senate Banking Committee tomorrow.

Suki Cooper, an analyst at Barclays Plc in New York, commented:

Gold has been pulled and pushed on the back of expectations of further quantitative easing and remains under pressure from the stronger U.S. dollar. Further signs of economic stress in key U.S. macro indicators could increase the likelihood of QE3.

Click here to read the full Bloomberg report.