Gold rebounds ahead of the EU Summit

Precious-Gold rebounds from its lowest level in six weeks hit yesterday as the dollar halted its rally ahead of the EU Summit two-day meeting starting today. Meanwhile, gold is traded at $1091.90 an ounce after getting support at $1084.00 levels.

Yesterday, gold shed $15.30 or 1.39% to close at $1087.25 an ounce. Gold Price was setin London on Wednesday at $1090.75 per ounce during the PM fixing declining from $1094.00 at the AM fixing.

However, gold rose today as the U.S. dollar stopped its advance against majors as seen by the dollar index, which tracks the dollar movements versus a basket of major currencies, which fell to 81.79. The dollar index inclined after breaching resistance at 81.30 the previous day but stalled its rise after hitting resistance at 81.90, where it could not stay above it after reaching a high of 82.05.

The largest boost given by the dollar index was from the euro which represents 57.6% of the index as it is currently traded near 10-month low against the green currency. Still, the outlook for the 16-nation currency is frightening due to concerns surrounding the bailout of Greece.

It seems that Greece will not receive an aid after the EU Summit, especially as Germany referred that the IMF is optimal solution for helping Greece. The euro is predicted to remain under pressure with the high deficit problems spilling over EU members. Fitch Ratings lowered Portugal's sovereign credit rating to AA-minus from AA yesterday and said that it sees negative outlook for the country. Spain is also suffering from high debt along with other macroeconomic problems.

The depreciation of the euro is affecting gold that dropped $18 since Monday. The shiny metal reached high records last year as a hedge against inflation on the back of the huge spending by governments and central banks all over the world, but now with the decline in inflation levels and gradual scale back of stimulus gold may lose momentum again.