Forexpros – Gold futures plunged Friday, as the U.S. dollar surged higher after Greece failed to meet the terms of its second bailout package.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1715.15 a troy ounce during early U.S. trade plunging 1.52%.
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Futures were likely to find support at USD1,712.65 a troy ounce, Tuesday’s low and resistance at USD1,765.85 a troy ounce, the high of February 3.
Earlier, gold buying was fuelled when Greek officials reached an agreement on austerity measures needed to obtain a EUR130 billion bailout package.
Greece, the European Commission, the European Central Bank and the International Monetary Fund met in Brussels yesterday to determine if Greece has met its obligations to qualify for its second bailout package.
However, things did not bode well for Greece at the troika meeting in Brussels, sending the euro sharply lower on the session.
German Finance Minister, Wolfgang Schaeuble stated that Greece is missing its debt cutting targets.
Schaeuble explained that two people who spoke on conditions of anonymity, who attended the Brussels meeting, stated that Greece’s austerity plan would leave its debt as high as 136% of gross domestic product by 2020.
The German Finance Ministry went on to state, “The Greek offer is not sufficient and they have to go away to come back with a revised plan.”
Greece is facing mounting opposition to the austerity measures needed to qualify for its second bailout package.
Greek Finance Minister Evangelo Venizelos stated that the parliamentary vote on the measures, set to begin this weekend, amounts to a ballot on euro membership.
Adding to the negativity, Fitch Ratings reiterated its opinion that Greece will default even if it obtains the bailout funds.
Meanwhile earlier, the United States saw a surprising decline in the number of first time unemployment claims last week. This solidifies hopes that the economic recovery is continuing in the world’s largest economy thus adding to the dollars strength.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.58% to trade at 79.14.
Gold prices often move inversely to the U.S. dollar, as gold becomes less expensive for buyers using other currencies.
Elsewhere on the Comex, silver for March delivery dropped 1.52% to trade at USD33.40 a troy ounce, while copper for March delivery dropped 1.60% to trade at USD3.92 a pound.
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