Gold extends losses below $1,200 to trade at 7-week low
New York (Feb 23) Gold futures tumbled below the $1,200-level on Monday to trade at the lowest level in seven weeks after euro zone finance ministers approved the extension of Greece's €240 billion bailout by four months, removing concerns that the country would face a liquidity crunch when its current bailout agreement expired at the end of the month.
Athens has until later in the day to present a list of reforms to be approved by the country's creditors in order to secure the bailout extension, which will give it more time to reach a lasting agreement with its creditors.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery hit a session low of $1,190.70 a troy ounce, a level not seen since January 5, before trading at $1,193.40 during European morning hours, down $11.50, or 0.95%.
On Friday, gold shed $2.70, or 0.22%, to settle at $1,204.90. The precious metal lost $22.60, or 1.81%, last week, the fourth straight weekly decline.
Futures were likely to find support at $1,177.80, the low from January 5, and resistance at $1,215.30, the high from February 20.
Meanwhile, silver futures for March delivery declined 14.8 cents, or 0.91%, to trade at $16.17 a troy ounce. Prices hit $16.11 earlier in the day, also the lowest level since January 5.
On the data front, the U.S. was to publish a report on existing home sales later Monday, as investors look for further hints on the strength of the economy and the future path of monetary policy.
Tuesday's testimony by Federal Reserve Chair Janet Yellen to the Senate Banking Committee will also be closely watched for any indication on when U.S. interest rates may start to rise.
Gold has been under pressure in recent weeks amid ongoing expectations for the Federal Reserve to start raising interest rates later this year.
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.
The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, tacked on 0.5% to 94.88.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Elsewhere on the Comex, copper for March delivery eased down 0.9 cents, or 0.35%, to trade at $2.582 a pound in holiday-thinned trade.
Markets in the world's biggest copper consumer, China, will remain closed until February 24 for the Lunar New Year holiday, removing a key support for prices.
The Asian nation is the world's largest copper consumer, accounting for almost 40% of world consumption last year.