SAN FRANCISCO (MarketWatch) — Gold futures edged lower Tuesday with
strength in the U.S. dollar prompting the metal to give back some of the
previous session’s gains as traders awaited a vote in Slovakia on
changes to the euro zone’s rescue fund.
Gold for December delivery
GC1Z
-0.41%
fell $4.70, or 0.3%, to $1,666.10 an ounce on the Comex division of the
New York Mercantile Exchange. Prices traded between a low of $1,655.40
and a high of $1,686.70.
Dow soars 330 points
Shares surge on Columbus Day as investors digest France and Germany’s vow to resolve euro-zone banking and sovereign-debt troubles.
“The yellow metal continues to move with the ebb and flow of hope that a
real solution to the European debt/banking crisis will be forthcoming,”
said Peter Grant, senior metals analyst at USAGold-Centennial Precious
Metals Inc.
“Reports that the troika will likely be releasing the next tranche of
bailout funds lifted the euro, and tempered some of gold’s recent
safe-haven bid in earlier trading.,” he said in emailed comments.
But European Central Bank President Jean-Claude Trichet’s “grim
acknowledgment of the mounting systemic risks and worries” about the
impending European bailout fund vote in Slovakia served to limit the
downside,” he said.
Trichet on Tuesday, speaking in his capacity as head of the European
Systemic Risk Board, told the European Parliament that the euro-zone
crisis “has reached a systemic dimension.” He called on officials to
quickly implement the package of measures agreed at the July 21 summit,
which includes a revamp of the 440 billion euro ($600 billion) European
Financial Stability Facility.
Read more of Trichet’s comments.
Slovakia, one of the poorest of the euro zone’s 17 members, commanded
the spotlight as its ruling party appeared likely to fall short of the
votes needed to approve enhanced powers for the region’s bailout fund.
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Overall, “the woes of the financial markets in the developed world have
become worse as politicians are dragging their feet at a time when they
should be acting,” analysts at GoldForecaster.com said in a recent
newsletter.
Federal Reserve, the euro zone suffers from a banking crisis and the
“first symptoms or deposit withdrawals have been seen for a while now,”
and German Chancellor Angela Merkel is warning of greater losses to be
borne by lenders to Greece, they said.
“Translated into the gold price, this means that the consolidation
process we’re seeing now is providing the floor that investors in Asia
crave,” they said, advising clients: “Don’t expect to see greater falls
in the gold price. Continue buying the dips.”
Meanwhile, U.S. stocks traded in a choppy pattern, on the heels of the
prior day’s rally, ahead of the Slovakia vote.
Read more on U.S. stock action.
Strength in the dollar added to Tuesday’s pressure on gold. The dollar index
DXY
-0.04%
, which measures the greenback against a basket of six major currencies,
stood at 77.719, up from 77.581 late Monday.
Read more on currencies action.
Gold and the dollar tend to move in opposite directions as a rise in the
dollar makes gold more expensive for holders of other currencies.
On Monday, the December gold contract ended at its highest settlement since Sept. 22, adding 2.1% on the session.
In other metals trading Tuesday, December silver
SI1Z
+0.19%
futures edged up 3 cents to $32.01 an ounce, while December copper
HG1Z
-2.23%
traded at $3.29 a pound, down 8 cents.
January platinum
PL2F
-0.36%
fell $6.40 to $1,518.70 an ounce and December palladium
PA1Z
-1.42%
lost $10.35 to $603.95 an ounce.
Myra Saefong is a MarketWatch reporter based in San Francisco.
Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.
