Gold drops on news Greece may bolster Cypriot banking sector
Published Mar 22, 2013 12:41PM ET
Gold prices have risen in recent sessions via demand from investors looking for hard assets to hedge against a weakening euro.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were down 0.42% at USD1,607.10 a troy ounce in U.S. trading on Friday, up from a session low of USD1,602.90 and down from a high of USD1,615.30 a troy ounce.
Gold futures were likely to test support USD1,590.80 a troy ounce, Monday's low, and resistance at USD1,615.80, Thursday's high.
Reports that Athens may help Cyprus contain its financial crisis sparked a rally for the single currency, which came at gold's expense.
Gold and the U.S. dollar tend to trade inversely from one another, though the yellow metal has lately become the hedge of choice against the euro during the latest eurozone crisis.
Cyprus's parliament is due to hold meetings throughout the day to mull an ultimatum imposed by its eurozone neighbors and the International Monetary Fund to raise EUR5.8 billion necessary for a EUR10 billion bailout package.
Representatives from lending bodies originally called on Cyprus to raise the money by slapping a one-time tax on bank deposits, which rattled markets worldwide amid fears the do-not-touch status of bank accounts may be changing when crafting European bailouts.
Still, proposals remain on the table call for taxing bank accounts holding at least EUR100,000, which watered down Friday's optimism by fueling uncertainty.
Cyprus must come up with a plan to raise EUR5.8 billion by Monday or risk seeing the European Central Bank halt the flow of emergency funding into its financial sector.
Still, hopes for a breakthrough sent the euro rising and gold falling on Friday.
Elsewhere on the Comex, silver for May delivery was down 1.82% at USD28.680 a troy ounce, while copper for May delivery was up 0.85% and trading at USD3.464 a pound.
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Written By: Investing.com
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