August gold closed at $1,187.80 per ounce, down $7.80 or 0.65 percent from Thursday’s closing price of $1,195.60 on the Comex division of the New York Mercantile Exchange (Nymex). Prices ranged as high as $1.203.90, the highest point all week, and also went as low as $1,185.80 during the session.

Gold prices went down 40 cents over the course of the week from last Friday’s closing price of $1,188.20 per ounce, touching a weekly low of $1,175.10 on Tuesday.

The report on 91 European banks, which account for 65 percent of the European banking system, was generally positive - all major international banks based in the EU passed and only seven failed, below an expected figure of 10.

Of the 14 German banks tested only one - the nationalized Hypo Real Estate - failed, while all four French banks and all five Italian banks passed. All Scandinavian banks passed, as did all the banks from debt-burdened Portugal.

However, some Spanish regional banks failed, although they had received bail-out money from the government, and some Greek banks failed.

Nonetheless, doubts lingered over the banks’ exposure to sovereign debt.

"Gold traded defensively despite the failure of seven out of 91 European banks to pass stress tests administered by local regulators," said analyst James Steel at HSBC.

"The mood and tone of the gold market may be turning more bearish near term. The failure of the seven European banks to pass the stress tests is clearly not sufficient to generate increased safe haven buying in bullion. Furthermore, gold has consistently failed to stay over $1,200 per ounce, which may encourage momentum-driven selling," he said.

A decline in prices, however, would be cushioned by slight increase in physical buying in India, he added.

"A good and early monsoon appears to be encouraging greater bullion purchases from the agricultural community, which is an important source of gold demand in India," Steel said.

Other precious metals, namely platinum and palladium, shrugged off gold’s losses and headed higher today, helped by better-than-expected quarterly results from Ford, Volkswagen and Scania.

October platinum rose $13.40 or 0.88 percent to close at $1,542.80 per ounce and September palladium gained $9.85 or 2.16 percent to close at $466.75 per ounce on the Nymex.

September silver, meanwhile, dropped 1.9 cent or 0.1 percent to close at $18.101 per ounce, with a range spanning from $18.06 to $18.28 during the session.

Fri, Jul 23 2010, 21:17 GMT
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