Forexpros – Gold futures were down for the first time in five days on Thursday, easing off a one-month high as the safe haven appeal of the precious metal was dented after European leaders made a breakthrough in resolving the region’s two-year old debt crisis.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,716.75 a troy ounce during early European trade, shedding 0.39%.
It earlier rose by as much as 0.52% to trade at USD1,729.65 a troy ounce, the highest price since September 23.
French President Nicolas Sarkozy said early Thursday that European leaders reached an agreement with banks to take a 50% writedown on the face value of their Greek debt holdings, easing pressure on the debt-laden country.
Additionally, the firepower of the European Financial Stability Facility, the region’s bailout fund, will be increased by as much as five-fold or about EUR1 trillion, though they did not say how the money would be provided.
“In taking today’s decisions, we lay the foundations for our future. All members of the euro summit are determined to follow this path,” said European Council President Herman Van Rompuy after the summit ended.
The news saw investors move in to riskier assets, such as stocks and high yielding currencies, and shed traditional safe haven assets like the U.S. dollar and gold.
Meanwhile, strong physical demand in Asia limited losses, as Diwali, one of the major Indian gold-buying festivals, started Wednesday. India is the world’s largest gold consumer.
In China, buyers increased purchases of the metal as demand typically picks up during the National Day holidays at the start of October and lasts through the Lunar New Year in January.
U.K. lender Barclays said in a report late Wednesday that, “Physical demand is expected to support both gold and silver prices in coming months, amid the seasonally strong period for consumption.”
Some mild profit-taking also weighed on prices, as the precious metal’s 6.5% four-day rally prompted some investors to sell their position and lock in gains.
Elsewhere on the Comex, silver for December delivery rose 0.46% to trade at USD33.46 a troy ounce, while copper for December delivery surged 2.47% to trade at USD3.576 a pound.
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