Last Updated : Dec 20, 2011 12:06 PM IST | Source:

Gold futures firm as Europe misses IMF fund target

Gold futures firm as Europe misses IMF fund target

Forexpros - Gold prices rose Tuesday, as investors snapped up the precious metal on news that European government finance officials missed a goal to allocate EUR200 billion to an International Monetary Fund emergency fund.

The group managed to muster up EUR150 billion, but coming up short renewed fears the continent is far from resolving the crisis and will run into problems firewalling the problem.

The group had originally planned to stash EUR200 billion in IMF lending facilities, although the U.K. recently backed out of an E.U.-wide accord to improve economic coordination across the continent.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,602.65 a troy ounce on Tuesday, up 0.37%.

Gold futures were likely to test support at USD1,585.65 a troy ounce, Monday's low, and resistance at USD1,610.85, Monday's high.

Fears still loom large that European countries could see their credit ratings downgraded, including AAA-rated France, based on recent warnings from Fitch Ratings to do just that.

Plus the markets are hoping for European Central Bank (ECB) intervention in the economy via asset purchases from banks, a move that would flood Europe with some sorely missed liquidity.

The ECB, however, has refused to do just that on the grounds it would rev up inflationary pressures.

The sale of continent-wide eurobonds would help the credit crunch as well, but big countries sush as Germany oppose that move and insist problem countries must do their part now and push through tough reforms.

'What really would be needed in the ideal world would be euro bonds or a substitute which can bring large-scale liquidity and confidence into the markets,' former UBS AG Chairman Peter Kurer told Maryam Nemazee told Bloomberg.

Elsewhere on the Comex, silver futures for March delivery were up 0.18% and trading at USD28.920 a troy ounce, while copper futures for March were up 01.40% at USD3.313 a pound.

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First Published on Dec 20, 2011 07:24 am
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