Forexpros –
Forexpros – Gold futures traded slightly lower during U.S trade Monday, as a relief rally triggered by Sunday’s Greek election results fizzled out amid concerns over Spain’s mounting borrowing costs.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,626.35 a troy ounce during U.S trade, giving back 0.10%.
It earlier fell by as much as 1.25% to trade at a session low of USD1,609.25 a troy ounce. Prices touched a seven-day high of USD1,634.35 a troy ounce on Friday.
Gold futures were likely to find support at USD1,559.35 a troy ounce, the low from June 8 and near-term resistance at USD1,642.15, the high from June 6.
Safe haven demand was boosted after the yield on Spanish 10-year bonds surged to a euro-era high of 7.28% earlier in the day, above the critical 7% threshold which prompted bailouts in Greece, Ireland and Portugal.
The spike in borrowing costs came in spite of efforts to insulate Madrid from the effects of the ongoing sovereign debt crisis by agreeing on a EUR100 billion aid package for Spanish banks.
Meanwhile, the yield on Italian 10-year bonds ticked up to 6.17% from 5.87%, amid fears over sovereign debt contagion from Spain and Greece.
Spain became the fourth euro zone nation to seek a rescue last week. Some investors fear it is only a matter of time before Italy becomes the next country to ask for help.
Investors were also jittery amid concerns over the ability of Greece’s pro-austerity New Democracy party to form a strong coalition government following Sunday’s narrow election victory.
Conservative New Democracy leader Antonis Samaras will begin forging a coalition government later Monday after early results projected the pro-bailout party as the winner in Sunday’s crucial parliamentary elections, edging out the anti-austerity Syriza party.
The pro-euro party would now have three days to form a governing coalition after gaining 129 seats out of the 151 seats it needs to lead the 300-seat government, according to the initial results.
However, investors remained cautious as Greece’s immediate fate remains uncertain. This week will see the second attempt in as many months for the Greek parties to form a coalition, after voters failed to conclusively back a new government in a parliamentary election on May 6.
Investors are awaiting further word from a Group of 20 summit in Mexico, amid hopes it could produce fresh measures to combat the crisis in Europe.
Gold traders were also eying the outcome of the Federal Reserves two-day policy meeting later this week, for clues as to the likelihood of a fresh round of monetary easing, which could potentially hurt the dollar and support gold.
Elsewhere on the Comex, silver for July delivery fell 0.27% to trade at USD28.66 a troy ounce, while copper for July delivery added 0.25% to trade at USD3.39 a pound.
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