Greece needs to its second bailout, worth €130 billion, to be approved if it is to meet €14.5 billion of maturing bond payments on March 20.
Eurozone economic confidence meantime rose for the first time since March last year, according to the European Commission's economic sentiment indicator.
"The outlook for economic growth in Europe in 2012 is not a healthy one," warns Ian Scott, London-based chief global strategist at Nomura.
London Gold Market Report
from Ben Traynor
Monday 30 January 2012, 09:00 EST
THE SPOT MARKET price of buying gold climbed to $1728 an ounce Monday morning London time – a slight drop from last week's close – while stock markets, commodities and the Euro all fell and government bond prices rose as European leaders met for their latest summit in Brussels.
The cost of buying silver fell to $33.08 at one point – a 2.6% drop from where it ended last week.
Gold fell as low as $1718 per ounce Monday morning, dropping steadily during Asian trading, though this represented a loss of only 1% on Friday's closing price.
"Everybody seemed to be expecting profit taking out of Shanghai after the two Chinese bourses came back online," said one Hong Kong dealer.
"As far as we can see, there wasn't much of that."
During last week's Lunar New Year holiday, China saw a "gold rush", with consumers spending more on buying gold than during the 2011 festival, according to a China Daily report.
"People seem crazy about gold, snatching it up more like a cheap cabbage than such a precious metal," it quotes Beijing resident Miao Miao.
The value of sales at two of Beijing's top gold retailers, Caibai and Guohua, reportedly hit 600 million Yuan ($95.28 million) – a 49.7% rise on last year's sales. The gold price in Dollars meantime rose around 25% over the same period.
The Yuan also appreciated against the Dollar over that time, gaining around 3.6%, which implies a rise in Chinese domestic gold prices of around 20%.
Despite strike action in Belgium that has brought transport to a halt, European leaders met in Brussels on Monday, where the issues of budget discipline and the Greek debt crisis were expected to dominate discussions.
"Solidarity and reliability are really coming together in this context," German finance minister Wolfgang Schaeuble said last week.
"We are credibly addressing the problems in the affected countries...and in the meantime we have to demonstrate solidarity."
Britain however has already walked away from the new budget treaty currently being drafted.
"To write into law a Germanic view of how one should run an economy and that essentially makes Keynesianism illegal is not something we would do," one British official told newswire Reuters.
Denmark, which does not use the Euro, has negotiated a concession that fines imposed on a country that breaches new deficit rules would only go into the Eurozone bailout fund if the fined country were a Eurozone member – otherwise they will go to the European Union's general budget.
Greece meantime has rejected a German proposal that an EU budget commissioner should have power over Greek taxes and spending.
"I think it's wrong that money from the EU's structural development fund is being spent on bicycle stands," German foreign minister Guido Westerwelle said on Friday, arguing that EU funds are being squandered.
The proposed budget commissioner would have the power to veto any decisions that were not consistent with targets set by Greece's international creditors.
"I would rather resign as a minister than allow anybody to tell us the way we should be spending our money," Greece's culture minister Pavlos Yeroulanos told the BBC.
Greek finance minister Evangelos Venizelos said the proposal "ignores some key historical lessons".
'Nein! Nein! Nein!' said the front page of Greek tabloid Ta Nea on Monday, which showed a picture of German chancellor Angela Merkel as a puppeteer, with the map of Greece depicted as a marionette.
Ahead of Monday's EU summit, there was still no news of a voluntary agreement between the Greek government and private holders of its debt over how that debt should be restructured and how large should be the losses private sector bondholders take.
Greece needs to its second bailout, worth €130 billion, to be approved if it is to meet €14.5 billion of maturing bond payments on March 20.
Eurozone economic confidence meantime rose for the first time since March last year, according to the European Commission's economic sentiment indicator.
"The outlook for economic growth in Europe in 2012 is not a healthy one," warns Ian Scott, London-based chief global strategist at Nomura.
"Nevertheless, even a recession in the Euro area, and very slow growth elsewhere, is unlikely to be sufficient to undermine the market if governments and central banks are able to stabilize sovereign spreads and lessen the immediate tail risk of a messy sovereign default."
Over in New York, the difference between bullish and bearish futures and options contracts held by Comex traders for selling and buying gold – the so-called speculative net long – rose for the third week in a row in the week ended last Tuesday, according to the latest data from the Commodity Futures Trading Commission.
"The change in the net position was largely the result of speculative longs being added," notes Standard Bank commodities strategist Marc Ground.
"Net spec length is still far off Q3 2011 levels," adds a note from precious metals consultancy VM Group.
"[This suggests] further moves higher are likely should sentiment remain bullish."
Ben Traynor
BullionVault
