Published: Monday, 12 Nov 2012 | 5:52 PM ET
Gold moved lower on Monday as a lack of an agreement by euro zone governments to disburse more money to Greece prompted bullion investors to sell and take profits.
The metal on Monday largely tracked lower with riskier assets such as the euro after euro zone finance ministers gave Athens two more years to make the budget deficit cuts they demanded.
A steadier Wall Street, amid better economic sentiment following last week’s over 2 percent drop in S&P 500 index, lessened safe-haven demand in gold, analysts said.
“Healthy economic data in the short term will be negative for risk-on markets as it reduces the urgency for global central banks to continue their ‘easy money’ stance,” said Adam Sarhan, CEO of Sarhan Capital.
Spot gold [XAU= 1723.50 -4.24 (-0.25%) ] edged down 0.2 percent to $1,727.39, within reach to a three-week high around $1,738 struck on Friday.
Flight-to-quality buying lifted gold 3.2 percent last week, its biggest weekly rise since late August.
Global markets have turned their focus from the election to the U.S. “fiscal cliff,” a combination of government spending cuts and tax increases due to be implemented under existing law in early 2013.
Gold would benefit from the government spending cuts and tax increases as a U.S. fiscal crisis could send the economy back into recession, economists say.
An encouraging U.S. nonfarm payrolls report earlier this month had erased all of gold’s gains, gains that followed the Federal Reserve in September announcing it would keep buying mortgage-backed securities until the job market dramatically improves.
U.S. gold futures [GCCV1 1723.00 -7.90 (-0.46%) ] settled unchanged at $1,730.90 an ounce.
Trading volume was lower than usual, 30 percent below its 250-day average, as the U.S. bond market was closed for the U.S. Veteran’s Day holiday and as the Hindu festival of Diwali began in India.
Silver [XAG= 32.26 -0.13 (-0.4%) ] dropped 0.6 percent to $32.38 an ounce.
In metals exchange news, the president of the Shanghai Gold Exchange told Reuters at the London Bullion Marketing Association (LBMA) conference that the bourse would launch an interbank market early next month that would start with spot contracts and gradually offer forward contracts.
Among platinum group metals, platinum [XPT= 1553.50 -6.74 (-0.43%) ] rose 0.5 percent to $1,558.10 an ounce, while palladium [XPD= 601.40 -3.57 (-0.59%) ] inched down 12 cents at $603.80 an ounce.
PGM traders will closely watch an industry report on Tuesday by platinum refiner Johnson Matthey which will shed light on whether reduced supply due to mine labor violence in top producer South Africa might turn the market into a deficit this year.