Forexpros – Gold futures regained strength on Monday, as the U.S. dollar came under pressure after German Chancellor Angela Merkel and French President Nicolas Sarkozy pledged to unveil new steps to tackles the ongoing debt crisis in the euro zone.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,661.25 a troy ounce during late Asian trade, jumping 1.56%.
It earlier rose by as much as 1.71% to trade at a daily high of USD1,663.75 a troy ounce.
German Chancellor Angela Merkel and French President Nicolas Sarkozy said at a joint press conference on Sunday that they have reached an agreement to recapitalize European lenders, though few details were provided.
The package will be revealed by the end of the month, according to reports.
The announcement by the two leaders came after ratings agency Fitch downgraded the credit ratings of Italy and Spain on Friday, citing the worsening euro zone debt crisis and fiscal situation in both countries.
The news saw the U.S. dollar come under broad selling pressure, with the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, down 0.85% to trade at 78.41, the lowest since September 30.
Dollar weakness usually benefits gold, as it boosts the metal’s appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Meanwhile, Wall Street investment bank Morgan Stanley said in a report over the weekend that gold could rally to USD2,464 an ounce next year, as investors seek to hedge their wealth against slowing global economic growth.
The lender said that gold is “our top commodity pick heading into 2012”, while adding that the precious metal “has been the most resilient in past recessions.”
Elsewhere on the Comex, silver for December delivery rallied 2.97% to trade at USD31.91 a troy ounce, while copper for December delivery climbed 1.55% to trade at USD3.324 a pound.
Morgan Stanley said that it expected silver prices to average USD50 an ounce in 2012, up from a previous estimate of USD42 an ounce.
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