Forexpros – Gold futures eased down on Tuesday, but remained above the key USD1,700-an-ounce-level as investors remained cautious ahead of a meeting of European Union finance ministers scheduled for later in the day.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,710.75 a troy ounce during early European morning trade, edging 0.22% lower.
It earlier fell by as much as 0.34% to trade at a daily low of USD1,710.05 a troy ounce.
Finance ministers from the 17 European Union member states were to meet in Brussels later in the day to discuss the region’s financial crisis and ways to boost the firepower of the European Financial Stability Facility, the region’s bailout fund.
In late October, euro zone leaders agreed to leverage the EUR440 billion EFSF to EUR1 trillion as part of a comprehensive agreement to resolve the debt crisis.
Also Tuesday, Italy was scheduled to auction up to EUR8 billion in ten-year bonds, in what was being seen as a key test of investor confidence in Italian debt.
The country’s ten-year yields stood at 7.33% ahead of the auction, a level widely viewed as unsustainable in the long term.
Meanwhile, French newspaper La Tribune reported earlier that ratings agency Standard & Poor’s could downgrade the outlook on France’s triple-A credit rating to negative within a week to 10 days.
Citing several unnamed sources, the newspaper said that the move by S&P could come “shortly”.
Elsewhere, ratings agency Fitch downgraded its credit outlook for the U.S. to negative, following a congressional committee’s failure to agree on deficit cuts.
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.
In recent sessions, gold has tended to move in line with stocks and other commodities, as investors prefer to turn to the relative safety of the U.S. dollar.
Elsewhere on the Comex, silver for March delivery dropped 1.6% to trade at USD31.72 a troy ounce, while copper for March delivery shed 0.33% to trade at USD3.361 a pound.
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