Gold corrects some of the gains, pressured by the strengthening U.S. dollar

With the start of this new week gold began the session weak and declined sharply due to the heavy pressures forced by the U.S. dollar, which sent the majors and other metals in addition to the commodities to the downside ahead of the awaited European Summit and other important economic data awaited later in the session today.

Gold retreated 0.74% or $12.80 per ounce to currently around $1726.28 per ounce after starting this week at $1739.08 per ounce, recording the highest at $1739.75 and the lowest at $1723.57 per ounce.

The countdown ended and finally we reached to the awaited European summit and now investors hold the low yielding U.S. dollar ahead of the meeting of European leaders, who are to discuss critical economic issues and draw the awaited plan which is set to resolve the debt crisis and prevent the contagion from spreading further into larger economies.

The metal extended the gains during the last week, which kept investors away from the metal today, where in such cases investors used to hold more of the shiny metal as a hedge against uncertainty; however, due to the strengthening U.S. dollar and the huge gains recorded last week, investors fear that profit taking transactions ahead of the European summit could send the metal to the downside.

European leaders are expected to outline the plan of creating the permanent rescue fund, while they are also expected to agree on the intergovernmental budget legislation, highlighting the Greek unfinished talks with the private sector over the percentage haircuts and the coupon rate on the new bonds expected to be issued instead of the current Greek debt.

European leaders are also expected to present a new plan that aims to boost growth and employment, where 20 billion euros of additional funds unused in the European Union budget will be hired to create jobs in the union and to relieve banks and support them to provide small and medium business with funds to operate and fight back the sequences of the debt crisis in the euro-area region.

With the European summit in focus, eyes are also tracking any improvement in the talks between Athens and the creditors, who are expected to accept a new deal with the Greek government, where Greece attempted to lower the coupon payment on the bonds to be issued in exchange for the existing Greek debt, supported by the European finance chiefs and the International Monetary Fund.

The heavy load of major fundamentals from across the globe are expected to add more volatility to the market, where in addition to the critical European summit, investors will also track the European confidence data and the U.S. income report along with the Italian and French bond auctions, as both nations will sell big amount of long-term bonds, and as usual markets will remain close watching any changes in the yields and demand for such bonds.

Among other precious metals, silver also declined today, affected by the strengthening U.S. dollar, where the metal after opening the session at $33.90 per ounce shed 1.75% of $0.59 per ounce to currently trade around $33.31 per ounce. The metal set a high of $34.03 and a low of $33.27 an ounce so far.

Platinum followed other metals and cut 0.97% or $15.75 per ounce after the opening of $1620.75 per ounce, recording a high of $1622.00 and a low of $1601.00, and trading in the moment around $1605.00 per ounce.

Palladium fell 0.83% or $5.75 per ounce after starting the session at $690.25 per ounce, trading now around $684.50 per ounce after reaching the highest at $693.00 and the lowest at $679.25 per ounce.