Forexpros – Gold futures trimmed losses on Monday, easing off a three-day low after comments from German Chancellor Angela Merkel and French President Nicolas Sarkozy added to hopes for progress in tackling the region’s debt crisis.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,748.15 a troy ounce during U.S. morning trade, shedding 0.18%.
It earlier fell by as much as 0.95% to trade at USD1,732.35 a troy ounce, the lowest price since November 30.
Gold futures were likely to find support at USD1,700.50 a troy ounce, the low of November 30 and resistance at USD1,766.95, the high of November 17.
In a joint press conference following a meeting between the two earlier in the day in Paris, German Chancellor Merkel and French President Sarkozy said that they had agreed on a plan to impose strict fiscal rules to all euro zone countries in the form of a new European treaty due to be concluded by March 2012.
Sarkozy added that euro zone leaders would use Friday’s summit meeting of the European Union’s 27 leaders to see if the treaty could win quick approval across the EU or just within the euro area.
Market sentiment had strengthened earlier after Italy unveiled a EUR30 billion package of austerity measures on Sunday aimed at reducing the country’s debt load, the second largest in the single currency bloc.
For much of the last year, investors’ typical reaction to upbeat news from Europe was to sell gold, as it reduces 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, with investors preferring the relative safety of the U.S. dollar.
Global financial service provider Commerzbank said earlier that while gold is not performing as expected at the moment, “there is no reason to be worried as it is not surprising after the last couple of weeks to see some profit taking.”
Gold futures rallied nearly 3.6% last week, the biggest weekly advance since late October, following a coordinated action by six major global central banks to enhance the capacity to provide liquidity to the global financial system.
Elsewhere on the Comex, silver for March delivery climbed 0.88% to trade at USD32.96 a troy ounce, while copper for March delivery rallied 1.2% to trade at USD3.628 a pound.
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