Gold prices tumbled hard Wednesday after a German court cleared the way for Europe's strongest economy to aggressively participate in a bailout of Greece and other nations whose sovereign debt is spinning out of control.
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.
Stocks jumped at the opening bell Wednesday in the United States, with all three major indexes gaining more than 1 percent.
Gold, however, plunged, dropping $63.30 per ounce -- or 3.38 percent -- to $1,810. The price had briefly fallen as low as $1,803.40. Gold for immediately delivery fell $55.05 per ounce to $1,811.56.