The price of gold reduced to $1,225 per ounce last Thursday in Europe. This is largely due to the rise of Euro against the dollar, implying that many consider that it’s highly risky to have a strong appetite for assets at the expense of bullion. The State Administration of Foreign Exchange, or SAFE, located in China, stated in their report that market for gold is not as suitable for allocation of assets because of its innate properties, including volatility, being illiquid and being small.

In New York, last Wednesday, gold was priced at $1,230.35. Now it’s price reduced to $1,223.20. Furthermore, future deliveries for the U.S., particularly in August, are now priced at $1,224.70. The Spanish debt auction in particular caused the rise of Euro, because this returned the confidence on how Spain will deal with its huge debt. The policy decisions of the European Central Bank also contributed.

Previously, when the euro was losing considerably, many investors demanded for gold because they wanted to diversify from the currency, according to many analysts. Now that the euro has increased, this buying of gold has been reduced. There is in fact an interim consolidation, and the future is most likely to be that the euro will fall down again, and that means that the gold will rise, but certainly, the situation can go both ways again in the future.