SAN FRANCISCO (MarketWatch) — Gold futures on Wednesday closed at their lowest level since December, as the dollar continued its winning streak amid concerns about Greece and Spain as well as the rest of the euro zone.

Gold for June delivery GCM22, -0.77% fell $10.30, or 0.6%, to $1,594.20 an ounce on the Comex division of the New York Mercantile Exchange. It traded as low as $1,578.50 an ounce, according to FactSet Research.

The settlement was the lowest for a most-active contract since Dec. 30.

“In the current environment, risk is off, and gold has been more of a risk asset than a safety asset recently,” said Frank Lesh, a broker and futures analyst with FuturePath Trading in Chicago. In addition, “the dollar is higher, which is not good for gold.”

Reuters

Gold fell roughly $35 to $1,604.50 an ounce on Tuesday — the lowest close for a most-active contract since the start of the year — as global stock markets retreated amid political deadlock in Greece after Sunday’s parliamentary elections.

Lesh saw a floor to prices around $1,560 an ounce.

Other metals also fell Wednesday, with silver and palladium showing the sharpest percentage pullbacks.

Rising Spanish bond yields were of concern to investors at midweek. Meanwhile, media reports said Alexis Tsipras, leader of Greece’s left-wing Syriza bloc, is continuing to try to form a government based on ripping up terms of the European Union and International Monetary Fund bailout deal struck by Greek and euro-zone leaders months ago.

Will political upheaval come to U.S.?

If a government can’t take shape, a June election in Greece is likely and leaves the “distinct possibility of Greece defaulting and exiting the euro, which will have contagion on Spain, Portugal, Italy, etc.,” said analysts at Sharps Pixley in London.

“In addition, the uncertainty would further aggravate euro-zone economic contraction, which is deflationary, something gold traders do not like to see,” the analysts wrote in a research note.

U.S. stocks traded lower alongside other commodities. The yield on Spanish government bonds returned to 6%, a level considered unsustainable.

The euro slipped below $1.30 as the U.S. dollar was seen as the safe haven of the day. The ICE dollar index DXY, +0.22% , which measures the greenback against a basket of six other currencies, rose to 80.012 from 79.719 in late trading Tuesday. Read more in Currencies.

The dollar marched higher for an eighth straight session, its longest winning run since 2008, as investors ran for cover from turmoil in Europe and worries about the pace of the global recovery.

‘Ignoring good news’

Still, the analysts at Sharps Pixley said gold investors are currently “overreacting to bad news and ignoring good news,” such as improving physical demand from India and exploding demand in China.

They cited the 1% excise duty on jewelry in India that has just been rolled back and a jump in Chinese imports of gold in the first quarter.

“The weakness in the paper gold market may continue due to technical selling or investor fatigue ... but this weakness is masking the massive activities going on in the physical gold market, especially among central banks who may be happy at a lower purchase price,” said the analysts.

Rounding out the action in metals, silver for July delivery SIN22, -3.91% fell 22 cents, or 0.2%, to $29.24 an ounce. That was silver’s lowest close since Jan. 4 and the first dip below $30 since mid-January.

July copper HGN22, was off 2 cents, or 0.5%, to $3.66 a pound, copper’s lowest since late April.

July platinum PLN2 shed $9.10, or 0.6%, to $1,499.20 an ounce. June palladium PAM2 sank $9.20, or 1.5%, to $613.65 an ounce.