Gold falls over 1pc on EU worries
Singapore, December 12, 2011
Gold prices fell more than one per cent on Monday on technical selling and concerns that the European Union summit had stopped short of producing a convincing plan to solve the euro zone debt crisis.
The approaching year-end and funding difficulties caused by financial market turmoil have reduced liquidity in the gold market, leaving prices prone to volatility. Spot gold prices fell more than $10 in just two minutes.
Investors remained nervous even after Europe secured a historic agreement on Friday to draft a new treaty for deeper economic integration in the euro zone.
'People are still worried about the economy and euro zone debt crisis and gold remains under pressure,' said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
A stronger greenback also weighed on dollar-priced gold. The euro slipped in Asia on Monday, and was expected to struggle going into the year-end.
Spot gold lost as much as 1.7 percent to a two-week low of $1,681.39 an ounce, and regained some lost ground to $1,690.65 by 0735 GMT.
The most-active U.S. gold futures contract lost 1.7 percent to $1,688, before recovering to $1,694.70.
Traders said the price move below $1,700 triggered stop-loss selling.
'On the technicals, we are heading for a triangular formation. If we move lower, we'll break to the downside and that is a bad signal,' said Dominic Schnider, head of commodity research at UBS Wealth Management in Singapore.
Gold from Hong Kong to mainland China jumped 51 percent on the month to a record high of 85.7 tonnes in October, as buyers took advantage of lower prices.
Silver slid along with industrial metals, losing more than 2 percent under the pressure of technical selling and an uncertain euro zone economic outlook.
Spot silver fell to a 1-1/2-week low of $31.37 an ounce, before trimming some losses to $31.51. US silver dropped 2.5 percent to $31.46, and recovered to $31.59.-Reuters