Forexpros – Gold futures were up for a second day on Monday, climbing to a three-day high as market sentiment was lifted after European leaders indicated progress on resolving the region’s ongoing debt crisis, while strong physical demand in Asia also lent support.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,651.65 a troy ounce during late Asian trade, jumping 0.94%.
It earlier rose by as much as 1.3% to trade at USD1,658.55 a troy ounce, the highest price since October 19.
At the conclusion of a series of weekend meetings in Brussels by European leaders on Sunday, German Chancellor Angela Merkel and French President Nicolas Sarkozy said that a broad agreement is taking shape in resolving the euro zone’s debt woes.
The plan includes measures to recapitalize European lenders, to restructure Greece’s sovereign debt and to boost the powers of the euro zone’s bailout fund, the European Financial Stability Facility.
A comprehensive response to the two-year old sovereign-debt crisis was expected to be unveiled at a follow-up meeting of EU policy makers on Wednesday.
For much of the last year, investors’ typical reaction to upbeat news from Europe was to sell gold, as it dampens 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.
Meanwhile, strong physical demand for the precious metal in Asia underpinned prices. According to Liu Yangyi, President of the nation’s largest bullion dealer, the China National Pearl, Diamond, Gem & Jewelry Import & Export Corporation, “Chinese buyers have been quite active these few days.”
“Higher prices this year haven’t deterred them,” he added.
In China, the world’s second largest gold consumer, demand typically picks up during the National Day holidays at the start of October and lasts through the Lunar New Year in January.
Elsewhere on the Comex, silver for December delivery rose 0.83% to trade at USD31.45 a troy ounce, while copper for December delivery rallied 3.5% to trade at USD3.336 a pound.
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