Gold prices fell more than 1 percent on Monday on technical selling and concerns that the European Union summit had stopped short of producing a convincing plan to solve the eurozone debt crisis. The approaching year-end and funding difficulties caused by financial market turmoil have reduced liquidity in the gold market, leaving prices prone to volatility.
Spot gold prices fell more than $10 in just two minutes. Investors remained nervous even after Europe secured a historic agreement on Friday to draft a new treaty for deeper economic integration in the eurozone. "People are still worried about the economy and eurozone debt crisis and gold remains under pressure," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
Spot gold lost as much as 1.7 percent to a two-week low of $1,681.39 an ounce, and regained some lost ground to $1,690.65 by 0735 GMT. The most-active US gold futures contract lost 1.7 percent to $1,688, before recovering to $1,694.70. Traders said the price move below $1,700 triggered stop-loss selling. Gold from Hong Kong to mainland China jumped 51 percent on the month to a record high of 85.7 tonnes in October, as buyers took advantage of lower prices.
Silver slid along with industrial metals, losing more than 2 percent under the pressure of technical selling and an uncertain eurozone economic outlook. Spot silver fell to a 1-1/2-week low of $31.37 an ounce, before trimming some losses to $31.51. US silver dropped 2.5 percent to $31.46, and recovered to $31.59. Prices of platinum group metals also weakened. Spot palladium fell 1.5 percent to $673, and spot platinum lost 0.8 percent to $1,499.75.
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