May 9, 2012 / 4:25 AM / 7 years ago

PRECIOUS-Gold dips to 4-month low on Greece uncertainty

* Physical buying picks up in Asian market
    * Gold-silver ratio climbs to highest since mid-Jan
    * Coming up: U.S. wholesale inventories, March; 1400 GMT

 (Updates prices)	
    By Rujun Shen	
    SINGAPORE, May 9 (Reuters) - Gold dropped to a four-month
low on Wednesday, pressured by a weaker euro as investors
fretted about the political upheaval in Greece that threatens to
sink the country into chaos and endanger the euro zone's efforts
to end the debt crisis.	
    Spot gold dropped to as low as $1,586.74 an ounce,
unseen since early January, extending a 2-percent slide from the
previous session. It stood at $1,593.56 by 0557 GMT.	
    U.S. gold also dropped to a four-month low at
    The Leftist candidate for prime minister in Greece has so
far failed to form a government, as his opposition to a bailout
deal seen crucial for the economy alienated mainstream parties
and shook market confidence that the euro zone will pull itself
out of the debt crisis. 	
    Nervous investors sought out safe haven assets such as the
dollar and German Bund, while gold remained lock-stepped with
the euro and riskier assets. 	
    The euro was headed for its eighth straight session of
losses against the dollar and fell close to a recent three-month
    "The situation in Europe is difficult, but what's happening
is that anything that's slightly tainted with risk is being
sold, even though the real risk associated with that product is
less than one could justify by its price movements," said Nick
Trevethan, senior metals strategist at ANZ in Singapore.	
    Analysts expected the next level of support for gold to be
$1,580 after it broke through $1,620, the lower end of the price
range it held for a month, and the psychologically important
$1,600 level in one day.	
    Dealers spotted a pickup in physical buying in the Asian
market, as market participants sought to take advantage of the
sharp slide in prices after weeks of largely rangebound prices.	
    "There is a lot of buying on the physical side despite the
fact that prices are still sliding, as people are comfortable
buying at prices below $1,600," said a Singapore-based dealer.	
    Spot silver broke below $29 an ounce for the first
time in nearly four months, and recovered slightly to $29.	
    "Watch out for silver prices to go even lower," said
Trevethan of ANZ. "With base metals under pressure, oil prices
falling and broad weakness in most markets, there is scope for
silver to fall further especially given its volatility."	
    The gold-silver ratio, used to measure how many ounces of
silver is needed to buy an ounce of gold, rose to 54.85, its
highest level since the middle of January.    	
     Precious metals prices 0557 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1593.56  -11.32   -0.71      1.90
  Spot Silver        29.13   -0.29   -0.99      5.20
  Spot Platinum    1500.94   -2.84   -0.19      7.75
  Spot Palladium    616.20    1.30   +0.21     -5.56
  COMEX GOLD JUN2  1593.90  -10.60   -0.66      1.73        25822
  COMEX SILVER JUL2  29.14   -0.32   -1.08      4.39         4446
  Euro/Dollar       1.2973
  Dollar/Yen         79.73
  COMEX gold and silver contracts show the most active months
 (Editing by Himani Sarkar)
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