LONDON—Spot gold fell for a fourth consecutive day in Europe due to profit-taking, but market observers say the price is likely to remain well supported due to continued concerns about the debt woes among many European countries.
Gold rose to a record intraday high of $1,249 a troy ounce Friday but has since pared back its gains and is now trading at $1,213.95 an ounce, down 0.8% on the day amid a combination of profit taking and easing fears about the euro-zone's debt troubles.
"Expect a slightly bearish day on [momentary] easing fear" about the Greek debt crisis and a bit of profit taking, said commodity Strategist Filip Petersson of SEB Commodity research. "This is driving investors over to more risky assets like equities," he added.
The FTSE 100 index in London was up 0.5% while the CAC-40 index in Paris was up 1.2%.
Euro-zone finance ministers Monday agreed that plans for closer budget cooperation are a "step in the right direction," said Luxembourg's Prime Minister, Jean-Claude Juncker. Euro-zone policy makers in recent weeks have been discussing new ways to rein-in spendthrift governments in the wake of Greece's debt crisis.
Investors have flocked to gold recently over concerns that the debt woes in some European Union member states might lead the European Central Bank to give lower priority to curbing inflation in the future.
The ECB bought €16.5 billion ($20.43 billion) worth of euro-zone bonds last week in a bid to restore investor confidence in debt issued by euro-zone governments with weak public finances. The ECB is carrying out a special one-week tender Tuesday to drain the extra liquidity injected into markets through the bond purchase but some market participants remain concerned.
"The recent [debt] crisis has changed the game a little bit. This is a fiscal crisis. Investors don't really believe that governments have incentive to hold down inflation at time of rising debt," metals analyst Peter Dixon said.
Mr. Dixon expects gold to remain well supported above $1,200 an ounce until uncertainty about the current debt crisis in Europe clears.
Elsewhere, silver is up 0.8% at $18.74 an ounce and platinum is up 0.2% at $1,669.10 an ounce while palladium is down 0.5% at $500.25 an ounce.
On the platinum supply side, South African port, pipeline and freight rail workers are set to intensify a strike over wages after mediated negotiations over the weekend broke down, which could affect platinum shipments.
Metals fabricator Johnson Matthey, a major platinum market participant, gave a bullish outlook on the industry Monday, forecasting prices between $1,600 and $2,000 a troy ounce for the rest of the year.
