Gold price jumps 1% on euro, Italy hope
Gold price gained more than 1 percent to above $1,700 an ounce on Monday as the euro rose on hopes Europe will take a bolder step to resolve a crippling debt crisis, while a recovery in equities also prompted buying from investors.
Mood was lifted by a report in Italian newspaper La Stampa suggesting the International Monetary Fund was preparing a rescue plan worth up to 600 billion euros for Italy, more than the IMF can currently provide on its own.
A source with knowledge of the matter told Reuters that contacts between the IMF and Rome had intensified but added it was unclear what form of support could be offered if a market selloff on Monday forced immediate action.
Official sources in Rome said they were unaware of any request for assistance from Italy.
Spot gold added $25.60 an ounce to $1,704.75 an ounce by 0259 GMT — its biggest daily gain in more than 2 weeks. Gold was still below a lifetime high of around $1,920 touched in September.
For now, we are seeing a bounce in financial markets after the record retail sales this Black Friday weekend. Bargain-hunters are back to push prices higher with a little bit of optimism, said Ong Yi Ling, an analyst at Phillip Futures in Singapore.
However, for this rally to be sustainable, we need a long-term resolution of Europe’s problems. Investors will be focusing on the meeting of euro zone finance ministers on Tuesday for more operational details of the bailout fund.
Euro zone finance ministers will meet on Tuesday, with detailed operational rules for the region’s bailout fund — the European Financial Stability Facility — ready for approval. The approval would pave the way for the 440 billion euro facility to draw cash from investors.
U.S. gold futures rose $22 an ounce to $1,707.7 an ounce.