- Gold prices eased on Monday, extending the previous week's hefty losses, as a warning from Fitch Ratings that it may downgrade France and six other euro zone countries hurt stocks and the euro and fuelled a dash to the dollar. "U.S. currency, often seen as a haven from risk."
- The euro eased towards an 11-month low on concerns that the euro zone sovereign debt crisis would damage global growth, while the dollar also got support on uncertainty after the death of North Korean leader Kim Jong-il.
- Managed money in gold futures and options cut bullish bets for a second consecutive week as gold prices fell sharply, the latest data from the U.S. Commodity Futures Trading Commission showed. "The need/desire to hold U.S. dollars trumped gold's safe haven attributes."
- Analysts say gold may be vulnerable to further losses towards the end of the year and in early 2012, with no end yet in sight to the euro zone debt crisis and some improvement expected in the U.S. economy, which should support the dollar.
- Demand for physical metal in the world's biggest gold consumer, India, was subdued on Monday as buyers postponed purchases in anticipation of bigger fall in prices, dealers said.
- However, gold's underlying appeal as a hedge against currency market
instability, an official sector reserve asset and a store of wealth in
emerging economies is expected to prevent too steep a correction, they
add. Even after last week's correction, spot gold prices remain up 12.3 percent from the beginning of the year. Among other precious metals, silver was down 2.2 percent at $29.04 an
ounce, having fallen nearly 8 percent last week, tracking gold. Spot platinum was down 0.1 percent at $1,414.74 an ounce, while spot palladium was up 0.4 percent at $620.66 an ounce.
LONDON (Reuters) -
Gold prices eased on Monday, extending the previous week's hefty losses, as a warning from Fitch Ratings that it may downgrade France and six other euro zone countries hurt stocks and the euro and fuelled a dash to the dollar.
Spot gold was down 0.3 percent at $1,594.39 an ounce at 1036 GMT.
The precious metal posted its biggest one-week loss since late September last week, falling to a near 12-week low as concerns over the euro zone debt crisis intensified, boosting the dollar at others assets' expense.
Investors' thirst for the U.S. currency, often seen as a haven from risk, is weighing on dollar-priced gold, which becomes more expensive for holders of other currencies as the unit appreciates.
"You're looking at euro weakness, rather than anything else, as the driving force behind the sell-off," said David Jollie, an analyst at Mitsui & Co Precious Metals. "You've got a stronger dollar and that will tend to lead to lower prices."
Traders with an eye on the end of the year are likely to be loath to add to long positions at this stage, whatever their view of gold prices' longer-term direction, he added.
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