Gold drops as commodities sell off continues

Gold fell for the second day on Thursday as investors continued the sell off commodities and buying dollar.

The previous session, gold shed $15.20 or 1.00% after closing at $1501.00 an ounce, while gold price was setin London at $1508.00 per ounce declining from $1524.50 during the AM fixing.

Yesterday, gold got some support from the rise in Chinese and German inflation, but the effect did not last long as the firm dollar weighed on the gold's rebound.

Spot gold is trading at $1493.60 an ounce after recording a high of $1506.35 and a low of $1490.51.

Pressure resume on commodities after the by the CME group on some commodities futures margins, such as silver and oil, as it raised the cost of trading in metals.

Silver, which fell 27% the previous week, dipped to a low of $33.52 compared with the day's starting level of $35.42, while oil touched the lowest point of $97.79 a barrel after closing yesterday at $98.40.

Among other precious metals, platinum edged down to $1762.50 from the day's opening of $1775.70 and palladium plunged to $708.00 from $715.70.

Meanwhile, European officials are discussing measures to solve the Greek agony and bailout Portugal, where Rehn mentioned that debt restructuring for Greece will end up with devastating implications on the debt-mired economy.

The Greek debt woes is pushing the euro down and giving more momentum to the dollar as a safe haven as investors became confident that the Fed will keep rates near zero for long while which encouraged buying the dollar as a safe harbor.

It seems that the US dollar will continued its rebound from three-year low that started last week as the dollar index is hovering around three-week high against a basket of major currencies as the dollar index inched down to 75.30 after opening today at 75.35.