Gold futures extended gains for a fourth straight day Monday, to settle at its highest in eight weeks, in the absence of any major catalysts even as some major policy decisions are awaited later this week. The dollar dropped against most major currencies but continued to trade marginally higher against the euro, after comments from the German central bank on ECB's yield cap plans. Nonetheless, investors continued to weigh some recent upbeat economic data, which have also thinned hopes of further quantitative easing from the U.S. Federal Reserve.
Germany's central bank on Monday reiterated its opposition to the European Central Bank's plan to purchase government bonds. Bundesbank said in its monthly report said the decision to share solvency risks should be taken by governments and not by central banks. The comments came after a German magazine reported that the European Central Bank may be planning to cap yields.
As a result of the ECB's comments, top European shares moved higher, while Spanish and Italian 10-year bond yields declined notably today.
Gold for December delivery, the most actively traded contract, gained $3.6 or 0.2 percent to close at $1,623.00 an ounce Monday on the Comex division of the New York Mercantile Exchange.
Gold for December delivery traded at an intraday high of $1,624.50 and a low of $1,611.80 an ounce.
Last week, gold settled marginally higher amid some encouraging economic data from both sides of the Atlantic even as investors continued to weigh the probability of additional quantitative easing from central banks globally, which could help gold prices as such measures tend to fuel inflationary trends.
The euro traded lower against the dollar at $1.2345 on Monday, as compared to $1.2353 late Friday in North America. The euro scaled a high of $1.2370 intraday and a low of $1.2296.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 82.48 on Monday, down from 82.54 in North American trade late Friday. The dollar scaled a high of 82.72 intraday and a low of 82.38.
Meanwhile, Greek Prime Minister Antonis Samaras is expected to meet some of the leaders of the euro currency bloc this week to request an extension of its fiscal consolidation program, reports said over the weekend. Samaras will be visiting Luxembourg Prime Minister Jean-Claude Juncker, who heads the group of euro-area finance ministers, by the middle of this week. He will also meet with German Chancellor Angela Merkel and French President Francois Hollande this week. Samaras is expected to put forward a request for a two-year extension for the country's fiscal adjustment program.
In economic news, eurozone construction output declined for the third consecutive month in June, Eurostat reported. In the construction sector, seasonally adjusted production dropped 0.5 percent from a month ago, when it fell 0.2 percent. Building construction was down 0.1 percent after staying flat in May. Likewise, civil engineering fell by 0.7 percent compared to a 0.5 percent rise in the prior month
by RTT Staff Writer
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