Forexpros – Gold futures held on to gains on Monday, as the safe haven appeal of the precious metal was boosted amid concerns the euro zone’s ongoing debt crisis was worsening with no end in sight.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,641.95 a troy ounce during U.S. morning trade, gaining 0.68%.
It earlier rose by as much as 1.05% to trade at a daily high of USD1,647.45 a troy ounce.
Gold futures were likely to find short-term support at USD1,625.85 a troy ounce, Friday’s low and resistance at USD1,662.85, the high of January 12.
Earlier in the day, France sold EUR4.503 billion of 12-week Treasury bills at a yield of 0.16%, up from 0.02% at a previous auction. The French Treasury also sold EUR2.192 billion of 25-week bills at a yield of 0.28%, up from 0.03%, and EUR1.895 billion of 51-week bills at yield of 0.40%, down from 0.53%.
Meanwhile, ratings agency Moody’s said earlier that it was maintaining France’s triple-A rating and stable outlook for its debt for now, but added that it would update markets in the first quarter of 2012.
The announcement came after Standard & Poor’s cut France’s triple-A rating by one notch on Friday and said it would decide shortly whether to downgrade the triple-A rating on the euro zone’s bailout fund, the European Financial Stability Facility.
S&P also downgraded eight other euro zone sovereigns, including Italy, Spain, Cyprus and Portugal.
Adding to nervousness over the euro zone’s debt crisis, talks aimed at negotiating a restructuring of Greece’s debts broke down on Friday, amid disagreements over how much money investors will lose by swapping their bonds. Negotiations are expected to resume on Wednesday.
Without the swap, debt-stricken Greece is unlikely to secure a second financial bailout, raising fears over a possible disorderly Greek default in March, when massive bond payments are due.
Gold, which has been trading more like a risk asset since late last year, seems to have broken that relationship, moving more like a safe haven asset in recent sessions.
Prices have gained nearly 5.5% since the start of 2012, boosted by the return of safe haven bids as the euro zone debt crisis entered its third year.
Wall Street investment bank Goldman Sachs said in a report Friday that it remained bullish on gold, citing the current low level of U.S. real interest rates. The bank forecast gold prices to hit USD1,940 an ounce later in the year.
“We view gold, along with copper, as providing the best value opportunities relative to our view of fundamentals in 2012,” the bank said Friday.
Elsewhere on the Comex, silver for March delivery rose 1% to trade at USD29.78 a troy ounce, while copper for March delivery gained 0.81% to trade at USD3.666 a pound.
Comex floor trading will be closed on Monday for the Martin Luther King Jr. holiday.
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