Gold Prices Fall on Greece, Spain Woes (Update 1)

Updated from 10:12 a.m. EDT with settlement prices

NEW YORK ( TheStreet) -- Gold prices sank Monday as eurozone fears mounted that Greece would default and Spain would need more help.

Gold for August delivery settled down $5.40 to $1577.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold priced traded as high as $1582.40 and as low as $1562 an ounce, while the spot price was down $8.80, according to Kitco's gold index.

"If you have two countries in major trouble at the same time, that of course is somewhat anti-inflationary because that means the economic recovery is going to take a little bit longer than people expect, even with stimulus," said George Gero, precious metals strategist at RBC Wealth Management.

Silver prices for September delivery were down about 26 cents to $27.04 an ounce, while the U.S. dollar index was up 0.29% to $83.74.

Gero said the selloff isn't as much because of sellers as it is because of a lack of buyers who are concerned about the S&P slumping, which could signal serious weakness in equities.

"We need dollar weakness, that's the only way we're going to get this thing to explode," said Phil Streible, "Look at the dollar ... there's not a chance that we're going to move up aggressively."

Streible pointed out that when gold rises above $1580 it doesn't appear to be much of a safety and that few buyers come in when it is that high; however, traders begin to buy when the price drops into the $1550 range.

Gold prices have been stuck in a repetitive pattern for weeks and traders could expect more of the same to continue in the short-term.

Gold mining stocks were mostly lower on Monday. Eldorado Gold ( EGO) led the dip at $9.82, down 53 cents, or 5.1%, while Randgold Resources ( AUY) was at $83.61, down $2.58, or 3%.

Among other mining stocks, Goldcorp ( GG), Yamana Gold ( AUY) and Barrick Gold ( ABX) were down 2.4%, 2.4% and 2.8%, respectively.

-- Written by Joe Deaux in New York.

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