Isra-Mart srl: PRECIOUS METALS: Gold Tumbles As Investors Seek Riskier Assets

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Gold fell as risk appetite improved after a German court approved that country's participation in resolving the euro zone's sovereign debt problems.

The most actively traded contract, for December delivery, was recently down $63.00, or 3.4%, at $1,810.30 a troy ounce on the Comex division of the New York Mercantile Exchange.

The front-month contract, for August delivery, was down $60.10, or 3.2%, at $1,809.80 a troy ounce.

Germany's Federal Constitutional Court ruled that the first Greek bailout package and aid extended through the European Financial Stability Facility, the euro zone's rescue fund, is legal. The move paves the way for German Chancellor Angela Merkel to win parliamentary approval later this month to expand the EFSF and make it more flexible.

The decision emboldened investors to return to equity and commodity markets, with some choosing to shed refuge assets like gold in favor of riskier bets that stand to bring greater potential returns.

But gold is unlikely to languish for long, said Standard Bank precious metals analyst Marc Ground.

"This news was largely expected and does little to change the ongoing sovereign-debt problems of the region. Again we feel sentiment will soon turn in favour of gold, as uncertainty and euro zone concerns are reignited," said Marc Ground at Standard Bank.

Gold's steepest losses were recorded during overnight trading in Asia, when around 6,000 contracts sold over four minutes knocked $50 a troy ounce off the futures price.