Forexpros – Gold futures fell for the second day Monday, on Greek default concerns and an improving U.S. economy.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1724.05 a troy ounce during mid U.S. trade falling 0.93%.
Gold futures were likely to find support at USD1702.84 a troy ounce, the low of January 26 and technical resistance exists at USD1737.86 a troy ounce, today’s high.
Gold’s selling was triggered on Friday, as non farm payrolls in the U.S. beat the forecast by adding 243,000 according to official data, and the unemployment rate dropped to 8.3%.
This improvement in the U.S. labor market signaled economic recovery in the world’s largest economy resulting in a flight away from safe haven investments into riskier assets.
Gold’s weakness was added to today on renewed fears that Greece will fail to reach an acceptable deal with its private creditors.
This agreement is critical for Greece to avoid default on March 20 by obtaining its next tranche of bailout funds.
French President Nicolas Sarkozy met with German Chancellor Angela Merkel today in Paris regarding the Greek situation. Merkel stated, “I don’t understand why we need a few more days–time is running out”, adding to the negative sentiment on the session.
However, Greece’s Prime Minister Lucas Papedemos reached a tentative deal with leaders of the three parties supporting his interim government. The agreement is designed to boost economic competitiveness and extend spending cuts.
During a five hour meeting yesterday, the Greek leaders agreed to make additional spending reductions equaling 1.5% of the gross domestic product.
Furthermore, Greek’s largest public and private union groups, ADEDY and GSEE called a twenty four hour general strike to protest the austerity measures.
In additional euro zone bearish news, the International Monetary Fund stated that China’s economic expansion may be cut in half by the euro zone’s debt crisis.
This Chinese crisis would warrant significant fiscal stimulus from the nation’s government. The IMF went on to state that China’s growth would drop be as much as four percentage points from the fund’s current projection for an expansion of 8.2% in 2012.
The Greek worries resulted in the U.S. dollar index gaining 0.12% to 79.14 on the session. Gold prices typically fall on dollar strength, as the dollar – denominated commodity becomes more expensive to investors holding other currencies.
Earlier, Bank of America has forecasted gold prices to hit USD2000 a troy ounce by the end of 2012, based on fundamental price factors.
Elsewhere on the Comex, silver for March settlement gave back 0.16% to trade at USD33.70 a troy ounce, while March copper futures gave back 1.00% to trade at USD3.86 a pound.
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