Nick Godt
Updated from 2:56 p.m. EST
Gold and metals headed lower on Monday, tracking a drop in crude oil prices amid easing concerns over Iran's nuclear ambitions. Gold for June delivery lost $4.40 in the session to finish at $679.90 an ounce. Silver for July delivery dropped 13 cents to $13.76 an ounce. Iranian President Mahmoud Ahmadinejad is said to have written a letter to President Bush seeking "new solutions" to their differences, the BBC reported Monday. The letter was perceived by markets as an easing of "geopolitical angst" over Iran's nuclear ambitions, according to Nell Sloane, metals analyst at NSFutures.com. Iran, the world's fourth-largest producer of crude oil, has refused to stop its nuclear program, which it says is for civilian use only. Last week, members of the United Nations Security Council proposed a draft resolution calling on Iran to stop enriching uranium. They also referred to "Chapter Seven" of the U.N. Charter, which opens the door to possible sanctions or military action. The standoff had helped lift the price of oil to $75 a barrel and of gold to 25-year-highs in recent weeks. Gold is used as a hedge against inflation, such as rising energy prices, and it also works as a safe-haven asset amid geopolitical tensions. In recent action, crude oil for June delivery was losing 43 cents to $69.75 a barrel, following news of the Iranian letter. Before pulling back, gold had reached another 25-year high at $688.20 overnight as the dollar continued last week's slide against major currencies. A weak dollar raises the value of dollar-denominated commodities, such as gold, as it takes more of the currency to buy the same amount of the metal. The dollar had dropped Friday after weaker-than-expected April employment numbers raised market expectations that the Federal Reserve will soon pause its 22-month-long campaign to lift interest rates.
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