By FXEmpire.com

Investors are reducing gold holdings for a third month, the longest stretch since 2004, and favoring the dollar as a haven from Europe’s debt crisis.Futures dropped 2 percent to $1,534.90 on the Comex in New York this year. Spot Gold is currently trading at $1535.90. Comex Silver is currently trading at $29.745 The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, is holding 1,277.11 tonnes as per latest available data on their website.

Greece’s decision to return to the ballot box in the search for a government unleashed a hazardous new phase in Europe’s debt crisis, with German Finance Minister Wolfgang Schaeuble calling the vote a referendum on whether the country stays in the euro. Post-election attempts to form a ruling coalition in Athens broke down today after nine days, sending Greeks back to the polls next month with surveys giving the lead to an anti-bailout party that would tear up the conditions attached to 240 billion Euros ($307 billion) of aid.

The euro tumbled to a four-month low. The euro touched its lowest level in almost four months after Greece’s political leaders failed to form a ruling coalition, deepening speculation the country will have to leave the currency bloc. Demand for the euro was damped before Greek leaders seek agreement today on an interim government that will schedule new elections. The Dollar Index extended its longest stretch of daily advances on record as Asian stocks continued a global equity rout and before the Federal Reserve releases minutes of its April meeting.

Oil dropped to the lowest price in almost five months in New York after U.S. crude stockpiles increased and Greek talks to form a coalition government collapsed, raising concern the region’s debt crisis will worsen. Crude for June delivery decreased as much as $1.38 to $92.60 a barrel. WTI Crude Oil is currently trading at $92.67 per barrel. Important data to be released today: Building Permits, Housing Starts, Capacity Utilization Rate, Industrial Production m/m and Crude Oil Inventories.

As per the American Petroleum Institute (API) report released yesterday, US crude oil inventories increased four times than expected by 6.6 million barrels for the week ending on 11th May 2012. The rise in the US crude oil inventories has reached to the maximum level since August 1990. Gasoline inventories declined by 2.6 million barrels and whereas distillate inventories also dropped by 1.6 million barrels for the same week.

The US Energy Department (EIA) is scheduled to release it weekly inventories report today and US crude oil inventories are expected to increase by 1.7 million barrels for the week ending on 11th May 2012. Gasoline stocks are expected to decline by 0.5 million barrels whereas distillate inventories are also expected to fall by 0.6 million barrels for the same period.

Iran and International Atomic Energy Agency (IAEA) officials had two days of meeting that ended yesterday in Vienna which saw both parties extending a round of negotiations over the nation’s nuclear program. IAEA officials will meet with Iranian officials again on 21st May in the same city.

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Originally posted here