Forexpros – Gold futures held steady on Monday, fluctuating between modest gains and losses as investors continued to eye developments surrounding the euro zone’s ongoing sovereign debt crisis.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,749.65 a troy ounce during early European morning trade, easing down 0.09%.
The February contract traded between a range of USD1,747.25 a troy ounce, the daily low and USD1,758.75, the daily high.
Gold futures were likely to find support at USD1,700.50 a troy ounce, the previous day’s low and resistance at USD1,766.95, the high of November 17.
Over the weekend, Italian Prime Minister Mario Monti’s cabinet outlined a EUR30 billion three-year austerity plan aimed at reducing the country’s budget deficit.
Meanwhile, German Chancellor Angela Merkel was to hold talks with French President Nicolas Sarkozy in Paris later in the day to outline proposals for stricter enforcement of the region’s budget discipline, ahead of Friday’s critical European Union summit.
For much of the last year, 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 recently.
Instead, gold futures have moved largely in line with other commodities and risk-sensitive assets over the past month, with investors preferring the relative safety of the U.S. dollar.
Sentiment on gold remained supported after South Korea’s central bank said on Friday that it purchased 15 metric tons of the precious metal last month to bring its total holdings of the metal to 54.4 tons, which is equivalent to 0.7% of its total foreign-exchange reserves.
German lender Commerzbank said in a report that, “Even after this purchase, gold accounts for less than 1% of the country’s currency reserves, meaning that further purchases are likely to follow.”
“The sustained interest in purchasing gold displayed by central banks is continuing to lend support to its price,” the report added.
According to data from the World Gold Council, central bank purchases in the third quarter jumped more than six-fold to 148.4 tons, on pace to reach the highest amount since 1970.
Elsewhere on the Comex, silver for March delivery edged 0.35% higher to trade at USD32.80 a troy ounce, while copper for March delivery shed 0.25% to trade at USD3.575 a pound.
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