Fears over the Outlook for Growth in the U.S. Dominate, while EU Debt Saga Resurface

Pessimism continued to dominate global financial markets on Tuesday after the U.S. income report for the month of June showed personal income rose below expectations, while personal spending contracted for the first time in almost two years, which raised concerns over the outlook for growth in the United States.

Moreover, fears that the European debt crisis will spread to Spain and Italy continued to boost demand for safe havens and lower yielding assets, especially after the yields on Italian and Spanish governmental bonds rose to the highest level in 14 years, which pushed gold prices to a new record high at $1641.05.

Stocks in the United States extended losses by opening on Tuesday, where the Dow Jones Industrial Average was down by nearly 0.40% to trade around 12,085, while the S&P 500 index was down by nearly 0.50% to trade around 1280. European stock indexes were also lower before closing on Tuesday, where FTSE 100 was down by nearly 0.37% to trade at 5753 and the DAX was down by nearly 1.0% to trade around 6885.

The U.S. dollar was little changed against a basket of major currencies on Tuesday, where the U.S. dollar index was trading at 74.36, compared with the opening level at 74.35. The Euro erased earlier losses against the Dollar, where the EUR/USD pair traded at $1.4281, compared with the opening level at $1.4271, and the British Pound also trimmed earlier losses but remained lower against the Dollar, where the GBP/USD pair traded around $1.6293, compared with the opening level at $1.6312.

Gold prices rose on Tuesday to a new record high above $1640 an ounce, where gold was trading around $1637 an ounce, and crude oil prices dropped to trade around $95 a barrel.