Forexpros – Gold futures edged lower on Tuesday, as a broadly stronger U.S. dollar pressured prices, but losses were limited amid renewed concerns over the debt crisis in the euro zone.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,712.05 a troy ounce during European morning trade, dropping 0.76%.
It earlier fell by as much as 0.97% to trade at a daily low of USD1,709.25 a troy ounce.
Gold’s losses came as the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rallied for a second day, climbing 0.95% to trade at a seven-day high of 77.37.
A stronger dollar usually weighs on gold, as it reduces the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
The greenback gained on the back of rising risk aversion after data released earlier showed that China’s official purchasing managers’ index for October fell to the lowest level since February 2009, declining to 50.4 from 51.2.
Meanwhile, reports that Greek Prime Minister George Papandreou has called a referendum on the new aid package as well as surging Italian borrowing costs added to investors’ nervousness over the region’s ongoing debt crisis.
“This introduces a whole new level of uncertainty into the latest euro zone handshake deal,” French lender BNP Paribas said in a report earlier.
Global equities were sharply lower amid the downbeat global economic outlook. Germany’s DAX 30 index tumbled 3.75% shortly after the open, while France’s CAC 40 index was down 3.35%.
Gold is considered a refuge from financial risk, but prices can drop amid a market-wide selloff as traders sell profitable holdings to raise cash and cover losses elsewhere.
Elsewhere on the Comex, silver for December delivery tumbled 1.73% to trade at USD33.73 a troy ounce, while copper for December delivery dropped 2.68% to trade at USD3.534 a pound.
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