Forexpros – Gold futures came under pressure during early European trade on Monday, as investors piled in to the U.S. dollar and Treasuries amid growing fears that Spain will need a full-scale sovereign debt bailout.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,575.45 a troy ounce during early European trade, shedding 0.45%.
It earlier fell by as much as 0.65% to trade at a session low of USD1,573.05 a troy ounce.
Gold futures were likely to find near-term support at USD1,567.35 a troy ounce, the low from July 18 and resistance at USD1,598.75, the high from July 17.
Fears over Spain’s deteriorating fiscal health intensified Friday after the indebted state of Valencia said it would seek financial help from Madrid.
More bad news emerged over the weekend when another region, Murcia, said on Sunday it would seek government financial aid.
The yield on Spanish 10-year bonds jumped to a record-high 7.46% during early trade Monday, above the critical 7% threshold widely considered unsustainable in the long run.
Meanwhile, fears over a Greek exit from the euro zone resurfaced, as Athens requested more time to meet the conditions of its international bailout ahead of a meeting with the Troika on Tuesday.
German Vice Chancellor Philipp Roesler, who is also the country’s economy minister, said he was “very skeptical” that European leaders will be able to rescue Greece.
Adding to the gloomy trade environment, a German media report over the weekend said that the International Monetary Fund may cut off aid to Greece, making the country’s insolvency in September more likely.
The euro sunk to the lowest level since June 2010 against the U.S. dollar, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.35% to trade at 83.91, just below the highest level since July 2010.
Gold has lost some of its safe haven appeal to the dollar, U.S. Treasuries and German Bunds, partly as a strengthening dollar makes the metal less attractive to buyers holding other currencies.
Elsewhere on the Comex, silver for September delivery tumbled 1.45% to trade at USD26.90 a troy ounce, while copper for September delivery sank 1.75% to trade at USD3.388 a pound.
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