US Gold futures settled lower Tuesday, giving back some of the previous session's gains and feeling the pinch of a higher USD on renewed concerns about the Eurozone.
Gold 1,569.40 -19.70 (-1.24%)
Traders reacted negatively to news Italy's prime minister, Mario Monti, said he could not rule out the country needing more from the Eurozone's rescue fund, and a German court reportedly could take more than three months to rule on the country's participation in funding the European Stability Mechanism.
The ESM was expected to be operational on 1 July.
The USD traded at a 2 yr high compared to the EUR, and a higher US unit is detrimental to Gold and other USD-denominated commodities as it makes them more expensive to holders of other currencies, dimming their appeal.
WTI Crude Oil 83.88 -2.11 (-2.45%)
A few traders also stayed to the sidelines as they awaited minutes, due Wednesday, from the most recent Federal Reserve meeting setting monetary policy and interest rates.
Gold prices had traded higher after the Bank of Japan said it will increase asset purchases to help beat deflation.
Earlier Tuesday, Bank of Japan Governor Masaaki Shirakawa said the bank was implementing strong monetary easing steps, such as its near-zero interest rate policy and asset purchases in order to overcome deflation.
Banks are now starting to buy Gold, given the amount of monetary stimulus pumped in across various economies across the world, and trying to mitigate currency exposure and currency depreciation.
The ICE USD index was at 83.352, up from 83.165 late Monday.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.