Forexpros – Gold futures were modestly higher on Monday, as the euro recovered against the U.S. dollar after French President Nicolas Sarkozy and German Chancellor Angela Merkel met to discuss ways to increase fiscal coordination within the single currency area.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,619.95 a troy ounce during U.S. morning trade, easing up 0.19%.
It earlier rose by as much as 0.48% to trade at a session high USD1,624.35 a troy ounce.
Gold futures were likely to find support at USD1,597.75 a troy ounce, the low of January 5 and resistance at USD1,643.65, the high of December 21.
Gold’s gains came as the euro recovered from the 16-month low against the greenback, while the dollar index declined 0.17% to trade at 81.48, easing off a 16-month high.
German Chancellor Angela Merkel said she was optimistic that the European Union will be able to sign off its fiscal pact by the end of January. Her comments came after meeting with French President Nicolas Sarkozy in Berlin earlier.
Still, Merkel said that that resolving the crisis would be “step-by-step, there’s no single-dimension solution.”
Monday’s talks were closely watched as European leaders failed last year to come up with effective solutions to end Greece’s financial woes and a widening sovereign debt crisis in the single currency bloc that is threatening the global economy.
Adding to fears over the region’s financial crisis, bank deposits at the European Central Bank’s overnight facility reached a new all-time high for the second consecutive day on Monday, underscoring the unwillingness of European lenders to lend to each other.
Wall Street investment bank Goldman Sachs said in a report earlier that the recent drop in the yellow metal’s price after a lofty build-up presents a “significant value opportunity” for investors.
For much of 2011, investors’ typical reaction to bad news from Europe was to buy gold, as it boosts the safe haven appeal of the precious metal. But that relationship has unraveled since price rose to a record high USD1,920 an ounce, as investors sold profitable gold holdings to raise cash and cover losses elsewhere.
Elsewhere on the Comex, silver for March delivery rallied 1.5% to trade at USD29.11 a troy ounce, while copper for March delivery shed 0.38% to trade at USD3.422 a pound.
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