Gold traded steady on Monday, as changes in the political leadership in Italy and Greece rekindled hopes for a resolution to the eurozone's debt crisis, fuelling risk appetite in markets. Equities and commodities rose after Italy and Greece rushed to form new governments to save the indebted nations from bankruptcy and fend off a wider financial meltdown in the eurozone.
Italy's new Prime Minister Mario Monti will face the first test of confidence when the Treasury auctions up to 3 billion euros of government bonds later today, after yields spiked to unsustainable levels at an auction last week. "The change in political leadership is calming the financial markets," said Ong Yi Ling, an analyst at Phillip Futures, adding that confidence in the new leaders could fuel risk appetite and push bullion higher.
Spot gold was little changed at $1,788.49 an ounce by 0653 GMT, after rising nearly 2 percent last week. US gold inched up $2.4 to $1,790.50. Technical analysis suggested spot could target $1,820 during the day, said Reuters market analyst Wang Tao. Activities on the physical market were muted, as buyers shy away from higher prices, dealers said. Premiums in Hong Kong and Singapore were little changed from last week.
"We see very light volume today. Gold could test $1,800 soon, while the $1,750 level provides good support," said a Hong Kong-based dealer. Platinum group metals led the rise in the precious metals complex. Spot platinum gained 0.8 percent to $1,647.75, and spot palladium rose 0.9 percent to $661, tracking strong gains in prices of industrial metals.
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