Forexpros – Gold futures came under pressure during European morning hours on Monday, as the euphoria that immediately followed Friday’s summit of European leaders moderated amid concerns over the effectiveness of the new measures to tackle the region’s debt crisis.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,593.15 a troy ounce during early European trade, dropping 0.7%.
It earlier fell by as much as 0.9% to trade at a session low of USD1,589.75 a troy ounce. Prices hit USD1,607.45 a troy ounce on Friday, the highest since June 21.
Gold futures were likely to find near-term support at USD1,548.45 a troy ounce, the low from June 28 and resistance at USD1,622.95, the high from June 20.
Precious metals prices surged Friday, with gold prices jumping 3% and silver soaring 5% as risk sentiment was boosted after European Union leaders agreed to use the euro zone’s bailout funds to support struggling banks directly, without adding to national debt and also agreed to set up a joint banking supervisory body for the euro area.
In addition to the direct recapitalization of Spain’s banks, euro zone bailout funds will be able to purchase government debt in order to keep down borrowing costs.
EU leaders also agreed to devote EUR120 billion in stimulus to encourage growth and create jobs.
But market sentiment cooled on Monday, as details about how and when European leaders can put the newly agreed measures into practice still remained uncertain.
Market analysts also warned that questions remain over the long-term effectiveness of the measures, while emphasizing that they do little to address the root causes of the euro zone’s debt crisis.
Market players will be closely watching as EU finance ministers hash out the details of these plans over the next two weeks.
Investors were also eyeing the outcome of the European Central Bank’s policy meeting on Thursday, amid growing expectations for a rate cut to support the faltering economy, as well as Friday’s U.S. nonfarm payrolls data.
Gold investors will be closely watching U.S. data in the second quarter for clues as to the likelihood of a fresh round of monetary easing, which could potentially hurt the dollar and support gold.
Trading volume in the U.S. will likely be light this week amid the Independence Day holiday on Wednesday.
Gold gained about 2.8% in June, but lost 4% on the quarter, as gold traders monitored developments regarding the euro zone’s ongoing debt crisis and speculation over further monetary easing by the Federal Reserve.
Elsewhere on the Comex, silver for September delivery fell 1.2% to trade at USD27.29 a troy ounce, while copper for September delivery dropped 1% to trade at USD3.462 a pound.
Copper gained 3.8% in June. In the March-June period, however, the red metal declined 8.7%, its worst quarter since the third quarter of 2011.
Monthly and quarterly, silver declined 0.6% and 15%, respectively.
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