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Gold plunges on economic optimism, ahead of central banks meeting
by icn.com
- Gold dropped 0.55 percent or 8.67 points to trade at 1,566.42
Weaker gold prices dragged down other precious metals where:
- Silver fell 1.20% to trade around 26.96
- Platinum lost 0.83% to 1,561.00
- Palladium came lower by 0.97% to 763.30
Gold prices extended losses for the second straight day on Wednesday hitting its lowest in almost four weeks as fears over the debt crisis in Europe subsided on fresh Cypriot talks. Meanwhile, investors appetite for risky assets increased on renewed optimism over the U.S. economy.
International lenders agreed on Tuesday to grant Cyprus two year s extra until 2018 to meet new budget target, in a bid to ease pressures on the island while the government comes up with a plan to revive the economy.
The agreement included a two year extension to achieve a targeted budget surplus of 4 percent through spending cuts and tax hikes. The extension was designed to give the Cypriot economy more time to recover as government officials forecasted that the country`s economic growth will shrink 9 percent in 2013.
The euro fell on Wednesday ahead of the policy decision by the European Central Bank (ECB) where investors seek more clues on the bank`s accommodative monetary policy.
As of 09:42 (GMT+2), t he euro traded at $1.2795 after opening at $1.2816. The EUR / USD pair set an intraday high of $1.2825 and a low of $1.2789.
Recent strong U.S. economic data curbed safe-haven demand; U.S. Census Department reported on Tuesday that the factory orders index for December rose 3.0 percent boolstered by a rise in demand for motor vehicles and commercial aircrafts.
The market is skittish ahead of U.S. jobs report as it will give investors a snapshot over the economic recovery and whether or not the economy is in need for more easing tools to stand on its feet again.
The Federal Reserve promised to react immediately and support the economy if labor conditions remain weak and the economy continues to show negative signs.
The dollar index hovered around 83.03 after opening at 82.90, USDIX hit a high of 83.04 and a low of 82.87.
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