Gold prices fell around the world Wednesday after a German court cleared the way for Europe's richest nation to help its weakest ones and a slew of encouraging news lifted global stock markets.
The dramatic response to the German court's action underscores just how vulnerable the world's financial markets have become to debt crises on both sides of the Atlantic.
Equities overnight surged from Asia to Europe as freshly heartened investors beat an exodus from safe-haven investments like gold and U.S. Treasuries and jumped into stocks. Whether they will stay there is an open question.
Germany's Constitutional Court rejected lawsuits aimed at blocking the country's participation in bailout packages for Greece and other eurozone countries. The court also handed the country's parliament a greater say over eurozone bailouts.
"Today's ruling should bring some relief to financial markets as a total chaos scenario has been avoided but it should not lead to euphoria," ING economist Carsten Brzeski told Reuters.
Besides the German court action, stock markets were helped -- and gold hurt -- by better-than-expected data on the U.S. services sector on Tuesday and Australian growth as well as speculation that Washington may unveil a $300 billion package to create new jobs also helped improve the mood.
In New York trading, gold for December delivery plunged $35, or 1.9 pecent, to $1,838.30 per troy ounce, from $1,872.30. Gold for immediate delivery fell $28.75 to $1,837.86, from $1,866.61.
Silver fell nearly 2 percent to $41.06, from $41.87. Silver for immediate delivery retreated 60 cents to $41.10, from $41.70.