Forexpros – Gold futures trimmed losses on Monday, pulling back from a three-day low as some safe-haven buying re-emerged amid ongoing concerns over the debt crisis in the euro zone.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,726.45 a troy ounce during U.S. morning trade, falling 1.3%.
It earlier fell by as much as 2.1% to trade at USD1,706.25 a troy ounce, the lowest price since October 26.
Gold’s safe haven appeal helped prices come off their lows after European Central Bank Governing Council Member Jens Weidmann said earlier that Greece’s fundamental problems remain “unsolved” following last week’s euro zone summit.
Meanwhile, Italian government bond yields continued to creep higher, with the two-year yield rising to 5.04%, the highest since July 2008. Yields on the ten-year bonds rose to 6.1%, the highest level since August 4, as investors worried that European leaders’ plans to bolster the region’s lenders could fail.
Investors often buy gold as refuges against economic and political uncertainty.
Gold prices dropped to the lowest level in three days during the Asian trading session as the U.S. dollar rallied against its major counterparts after Japanese officials launched an intervention to weaken the yen after the dollar fell to a record low of JPY75.56 in early trade Monday.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rallied 1.19% to trade at 76.11.
Gold prices often move inversely to the U.S. dollar, as gold becomes more expensive for buyers using other currencies.
Meanwhile, gold traders were awaiting a number of key events scheduled for later in the week, which could affect prices.
The Federal Reserve is scheduled to hold its policy-setting meeting on Wednesday, while the European Central Bank is to meet on Thursday to discuss monetary policy.
French lender Societe Generale said that in the near-term, “the market will focus on how central banks across the board are going to shift from neutral or tightening to accommodative or aggressively accommodative policy.”
The lender said in a report that, “Gold should slowly drift higher. If we get some significant policy decisions, like an announcement of QE3, it will give a jolt to the upside.”
Elsewhere on the Comex, silver for December delivery dropped 2.72% to trade at USD34.32 a troy ounce, while copper for December delivery tumbled 2.78% to trade at USD3.603 a pound.
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