Forexpros –
Forexpros – Gold fell nearly 3% on Monday, hitting six week lows, as euro zone fears sent the U.S. dollar sharply higher.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1668.65 a troy ounce booking its largest drop in 3 months.
Gold futures were likely to find support at USD1665.05 and technical resistance exists at USD1670.05.
The failure of the European Summit to take decisive action to end the euro zone debt crisis forced investors into the safety of the greenback and out of gold.
Precious metal broker, Carlos Perez-Santalla at PVM Futures explained to Reuters, “Fears of gold liquidation to pay for losses in the equity market has accelerated the downward move.”
For much of last year, investor’s typical reaction to bad news from Europe was to buy gold as a safe haven.
However, this correlation has unraveled recently. Presently, gold futures have moved in line with riskier commodities over the past month. Safe haven seeking investors have turned to the greenback instead of gold in times of stress.
The euro traded sharply lower against the U.S. dollar, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, surged 1.37% to trade at 80.23.
Elsewhere on the Comex, silver for March delivery plunged 3.38% to trade at USD31.17 a troy ounce, while copper for March delivery gave back 1.4% to trade at USD3.46 a pound.
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