Gold steady after Germany warns on debt deal
Singapore, October 18, 2011
Gold prices held steady on Tuesday, with investors looking out for more clues from the euro zone on whether the bloc will come up with a concrete plan to solve the debt crisis, after Germany cautioned against any definitive solution.
Germany said on Monday that a summit of EU leaders next Sunday would not produce a miracle cure for the euro zone's sovereign debt crisis, a warning that pushed down markets after a rise in the past week on expectations of a breakthrough.
A satisfying game plan is likely to lift the sentiment in risk assets and benefit gold, which has moved in tandem with equities and other commodities in recent weeks.
But a swift cure would be difficult to achieve, given the disparity in economic and social development in the 17 euro zone nations, and this could help burnish gold's safe-haven appeal.
"It will not be the end of problems there," said Mark Pervan, Global Head of Commodity Research of ANZ. "There will be residue risk in the market, and the market would have to long gold."
Spot gold was nearly flat at $1,671.05 an ounce by 0302 GMT, easing from a three-week high of $1,694.60 hit in the previous session. US gold edged down 0.2 percent to $1,672.80.
If European nations failed to produce a concrete deal, the dollar could benefit, denting sentiment in commodities. The greenback's 6-percent rise last month contributed to a dismal 11-percent drop in spot gold prices during the period, the biggest monthly loss since October 2008. - Reuters