Forexpros – Gold futures trimmed losses on Monday, as renewed concerns that the euro zone’s sovereign debt crisis will worsen boosted the safe haven appeal of the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,785.55 a troy ounce during U.S. morning trade, easing down 0.14%.
It earlier fell by as much as 0.87% to trade at a daily low of USD1,774.95 a troy ounce.
Italy’s Treasury auctioned EUR3 billion of five-year government bonds at an average yield of 6.29% earlier in the day, up from a yield of 5.32% in a previous sale last month.
The auction, which was viewed as a key test of investor confidence in Italian debt, was the first after former European Commissioner Mario Monti was appointed to head a new government charged with implementing urgent reforms.
Adding to nervousness over the region’s debt crisis, Spanish government debt came under broad selling pressure ahead of next week’s general elections, with the 10-year yield rising above 6.0% for the first time since early August.
Italy and Spain are the euro zone’s third and fourth largest economies. Markets long have feared a debt crisis centering on those two nations would have the potential to bring down the single currency.
The news saw the U.S. dollar advance against the euro, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.58% to trade at 77.55.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Meanwhile, Wall Street investment bank Goldman Sachs raised its three-month average gold price forecast by 7% to USD1,760 an ounce. The bank also raised its 12-month outlook for the precious metal to USD1,930 an ounce, up from a previous forecast of USD1,860 an ounce.
Goldman cited expectations of continued low interest rates in the U.S. and support from the ongoing euro zone financial crisis as the major factors that will push prices higher.
Elsewhere on the Comex, silver for December delivery fell 0.78% to trade at USD34.41 a troy ounce, while copper for December delivery climbed 1.45% to trade at USD3.514 a pound.
Goldman increased its three-month silver forecast by 6.9% to USD29.40 an ounce, its six-month outlook by 5.9% to USD30.60 an ounce and its 12-month forecast by 3.5% to USD32.20 an ounce. 
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