Gold slumps below $1,400 as dollar strengthens

The Associated Press
Associated Press

The price of gold fell again on Wednesday, closing under $1,400 an ounce for the first time in a month.

Gold for June delivery fell $28.30 to settle at $1,396.20 an ounce, a decline of 2 percent.

Another increase in the value of the dollar helped push gold prices lower. People often buy gold as an alternative to holding dollars, so when the U.S. currency appreciates, they'll often sell gold. The dollar strengthened to $1.288 versus the euro late Wednesday from $1.294 late Tuesday.

Traders had another reason to sell gold Wednesday: a tame inflation report. The government reported that U.S. wholesale prices fell in April by the most in three years. Traders also buy gold when they're fearful of inflation, and sell it when they see inflation ebbing.

Gold has lost 6 percent this month and 17 percent in the year to date. On April 15 it plunged $140 an ounce, its biggest one-day drop since 1983, as traders worried that central banks in Cyprus and other fiscally strained countries in southern Europe like Italy and Spain might start selling their gold reserves to pay for financial bailouts.

Silver also fell sharply Wednesday. The July contract lost 72.10 cents to $22.658 an ounce, or 3.1 percent. Other metals prices were mixed.

Copper for July delivery fell 2.3 cents to $3.265 a pound. Platinum for July fell $11.20 to $1,490.70 an ounce. June Palladium rose $1.90 to $729.05 an ounce.

In the market for grains and other crops, wheat fell 17 cents to $6.9375 a bushel. Corn fell 1.75 cents to $6.5075 a bushel.

Soybeans slipped 2 cents to $14.1275 a bushel.