Forexpros — Gold futures extended gains in Asian trade Tuesday, on renewed hopes for action on Europes sovereign debt crisis while a weaker dollar helped spark enthusiasm for the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,681.65 a troy ounce during early Asian trade, adding 0.27%, after hitting a low of USDS1,673.35.
Over the weekend, German Chancellor Angela Merkel and French President Nicolas Sarkozy, said that they had agreed to strengthen European banks and that specifics of a package of measures would be revealed by the end of the month.
“We are determined to do all that is necessary to guarantee bank recapitalization,” Merkel said at a joint news conference in Berlin following the meeting.
Meanwhile, the troika of international lenders, the European Union, the International Monetary Fund and the European Central Bank were set to conclude review meetings with Greek officials in Athens.
A favorable report could clear the way for the release of a USD10.8 billion rescue package for Greece it needs by the middle of next month in order to to avoid debt default.
Wall Street shares reacted positively to the news from Europe, with the Dow Jones Industrial Average gaining 2.97% to 11,433.18, the Nasdaq Composite Index jumped 3.5% to 2,566.05 and the S&P 500 was up sharply by 3.41% to end the day at 1.194.89.
Meanwhile, global financial provider UBS commenting on the announcement from Berlin said in a report Monday, that “While a detailed plan was lacking, we view any progress on bank capitalization as a positive for gold.”
“Typically, liquidity concerns and funding issues are not gold’s friends,” UBS said.
On the Comex, silver for December delivery added 0.13% to trade at USD32.12 a troy ounce, while copper for December delivery fell by 0.09% to trade at USD3.372 a pound.
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