Gold futures slumped for a third session Tuesday, again tracking the euro lower against the dollar on worries that Europe's debt crisis could be set to worsen because of political gridlock in Greece. The most-actively traded contract, for June delivery, settled down $3.90, or 0.3 percent, at $1,557.10 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest settlement since Dec. 29. Greece's president on Tuesday said negotiations to form a coalition government had failed, likely setting the country up for new elections. Some investors have worried that political turmoil in Greece could jeopardize the country's international financial backstop and perhaps spark its exit from the euro zone. Gold has struggled in recent months when euro-zone worries were front and center, as investors favored the flexibility of cash at the expense of precious-metals futures. “Everyone's jumping into the dollar,” said Adam Klopfenstein, a market strategist with Archer Financial Services. The dramatic shifts in the euro-zone outlook in recent days had pushed investors toward flexibility, he said. “If people need to flip to another asset class, it's a lot easier to do that with currencies than tangible goods” such as gold, he said. Gold and the US dollar have an added tie, as a stronger dollar makes dollar-denominated gold appear more expensive for buyers using other currencies. The ICE US Dollar Index, which tracks the currency against those of some major US trading partners, Tuesday touched its highest point since mid-January. Meanwhile, oil fell near a five-month low after a second Greek election was called for as attempts to form a government failed, sending the euro tumbling. Crude oil for June delivery decreased 80 cents to $93.98 a barrel on the New York Mercantile Exchange, the lowest settlement since Dec. 19. Prices are down 4.9 percent this year. Brent oil for June settlement gained 67 cents, or 0.6 percent, to end the session at $112.24 a barrel on the London- based ICE Futures Europe exchange. June futures expire Wednesday. The more-active July contract rose 45 cents, or 0.4 percent, to close at $111.45. “Brent would be lower if not for the June expiration tomorrow,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “A lot of the length has already been liquidated because of the impending expiration.” The euro dropped as much as 0.8 percent to $1.2722 against the dollar, the lowest level since Jan. 17. “The Greek elections sent the euro lower and caused oil to lose its gain,” said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania. “There's a direct correlation.” The European sovereign debt crisis that began in Greece and then moved to Ireland, Portugal, Italy and Spain has reduced economic growth and fuel consumption. An Energy Department report tomorrow will probably show that US crude-oil stockpiles advanced 1.75 million barrels to 381.3 million last week, according to the median of 12 analyst estimates in a Bloomberg survey. That would be the highest level since August 1990. Analysts were split over whether stockpiles of gasoline and distillate fuel, a category that includes heating oil and diesel, declined or increased, the survey showed.
