Gold futures on the COMEX Division of the New York Mercantile Exchange moved moderately higher on Monday as investors remained deeply worried about financial health of other peripheral eurozone nations such as Portugal and Spain, but a stronger dollar kept a lid on gold prices. Silver extended gains and platinum slightly down.
The most active gold contract for February delivery added 3.2 U. S. dollars, or 0.2 percent, to 1,367.5 dollars per ounce.
European finance ministers approved Sunday an 85-billion-euro loan package to help Ireland with its debt, but it failed to quell investors' lingering concerns over the financial health of Spain and Portugal. Euro slumped to a fresh 2-month low against the greenback earlier Monday, and the borrowing cost for cash-strapped governments in Europe continued to hike.
Gold received some help as cautious investors tend to increase their gold position as a hedge against the uncertainty of eurozone economy, but the greenback outperformed the bullion as the same concerns pushing gold price up as a safe-haven investment also spurred investors to flock to dollar, while dumping euro and other riskier currencies.
"Savvier investors from the euro region are using the weaker euro to purchase gold futures as well as physical bullion to protect their wealth. In other words, a flight to "safer havens" and tangible assets,"said Mike Daly, a gold specialist with PFG BEST in Chicago.
The strong rally in dollar made dollar-denominated bullion more expensive for investors and traders holding other currencies, decreasing gold's appeal as an alternative investment.
Silver futures for March delivery climbed 42.1 cents, or 1.6 percent, to 27.193 dollars per ounce. January platinum trimmed 0.6 dollars, or 0.04 percent, to 1,644.6 dollars per ounce.
