Investing.com - Gold futures traded lower during U.S. afternoon trade on Tuesday, as a climbing U.S. dollar depressed commodity prices amid growing concerns over the results of the upcoming European Summit.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,574.65 a troy ounce during early U.S. morning trade, slumping 0.90%.
Gold futures were likely to find support at USD1,546.35 a troy ounce, the low from June 1 and near-term resistance at USD1,605.25, the high from June 21.
The greenback strengthened against the euro after Spain saw short-term borrowing costs double at an auction of government debt earlier in the day.
Spain’s Treasury auctioned EUR1.6 billion worth of three-month government bonds, slightly more that the targeted amount, at an average yield of 2.36%, up sharply from 0.84% in May. Spain also sold EUR1.48 billion of six-month debt at an average yield of 3.23%, up from 1.73% in May.
Following the auction, the yield on Spanish 10-year bonds rose to 6.73%, nearing the critical 7% threshold, which is widely viewed as unsustainable in the long term.
On Monday, Moody’s ratings agency on Monday downgraded 28 Spanish banks, citing concerns over Madrid’s ability to support its banking sector, which the agency said was vulnerable to further losses from Spain's real-estate bust.
The announcement came after Spain’s government formally requested aid of up to EUR100 billion for its banks from its euro zone partners.
Meanwhile, Italy’s Treasury sold EUR2.99 billion worth of two-year bonds at an average yield of 4.71%, the highest since December.
Sentiment on the euro also remained fragile amid doubts over whether an upcoming European Union summit will result in fresh measures to tackle the region’s debt crisis.
On Monday, German Chancellor Angel Merkel quashed hopes that the euro zone could issue joint euro bonds, saying the idea was "economically wrong" and "counterproductive."
Adding to the gloom, Cyprus became the fifth euro zone country to request financial help from Brussels, adding to concerns over the level of debt contagion in the single currency bloc.
Fitch Ratings downgraded Cyprus to "junk" status on Monday, citing the amount of rescue money that would be needed to bail out its banks which are heavily exposed to the troubled Greek economy.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was slipped 0.04% to trade at 82.61.
Although gold’s appeal as a safe haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal in recent months.
A weakening euro and stronger dollar have weighed on gold instead, as the precious metal has been moving in tandem with riskier assets since hitting a record high of USD1,920 last September.
Gold has lost some of its safe haven appeal to the dollar, U.S. Treasuries and German Bunds, partly as a strengthening dollar makes the metal less attractive to buyers holding other currencies.
Elsewhere on the Comex, silver for September delivery plunged 1.87% to trade at USD27.07 a troy ounce, while copper for September delivery fell 0.19% to trade at USD3.32 a pound.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,574.65 a troy ounce during early U.S. morning trade, slumping 0.90%.
Gold futures were likely to find support at USD1,546.35 a troy ounce, the low from June 1 and near-term resistance at USD1,605.25, the high from June 21.
The greenback strengthened against the euro after Spain saw short-term borrowing costs double at an auction of government debt earlier in the day.
Spain’s Treasury auctioned EUR1.6 billion worth of three-month government bonds, slightly more that the targeted amount, at an average yield of 2.36%, up sharply from 0.84% in May. Spain also sold EUR1.48 billion of six-month debt at an average yield of 3.23%, up from 1.73% in May.
Following the auction, the yield on Spanish 10-year bonds rose to 6.73%, nearing the critical 7% threshold, which is widely viewed as unsustainable in the long term.
On Monday, Moody’s ratings agency on Monday downgraded 28 Spanish banks, citing concerns over Madrid’s ability to support its banking sector, which the agency said was vulnerable to further losses from Spain's real-estate bust.
The announcement came after Spain’s government formally requested aid of up to EUR100 billion for its banks from its euro zone partners.
Meanwhile, Italy’s Treasury sold EUR2.99 billion worth of two-year bonds at an average yield of 4.71%, the highest since December.
Sentiment on the euro also remained fragile amid doubts over whether an upcoming European Union summit will result in fresh measures to tackle the region’s debt crisis.
On Monday, German Chancellor Angel Merkel quashed hopes that the euro zone could issue joint euro bonds, saying the idea was "economically wrong" and "counterproductive."
Adding to the gloom, Cyprus became the fifth euro zone country to request financial help from Brussels, adding to concerns over the level of debt contagion in the single currency bloc.
Fitch Ratings downgraded Cyprus to "junk" status on Monday, citing the amount of rescue money that would be needed to bail out its banks which are heavily exposed to the troubled Greek economy.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was slipped 0.04% to trade at 82.61.
Although gold’s appeal as a safe haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal in recent months.
A weakening euro and stronger dollar have weighed on gold instead, as the precious metal has been moving in tandem with riskier assets since hitting a record high of USD1,920 last September.
Gold has lost some of its safe haven appeal to the dollar, U.S. Treasuries and German Bunds, partly as a strengthening dollar makes the metal less attractive to buyers holding other currencies.
Elsewhere on the Comex, silver for September delivery plunged 1.87% to trade at USD27.07 a troy ounce, while copper for September delivery fell 0.19% to trade at USD3.32 a pound.