By: Clara Denina London 27/06/2011 - Gold prices struggled to hold around $1,500 in European trading on Monday morning, depressed by renewed selling activity as the US dollar strengthened against the euro on worries of further debt issues in Greece. Spot gold dropped to a fresh one-month low of $1,491.20 per ounce at one stage in earlier trading before settling at $1,500.50/1,501.30 per ounce, down just 30 cents. Gold lost 1.6 percent in the previous session. Although it managed a close above $1,500, this was below the metal’s 50-day moving average of $1,520, which turned technical signals negative. “For medium-term technical trend readings to remain positive, $1,465/70 needs to hold,” broker Credit Suisse said. On the charts, the next resistance levels are pegged at $1,503 and $1,520, while support stands at $1,501-$1,500 and $1,486. “The price of gold is currently unable to profit from continued high risk aversion of market players and has slid below the psychologically important mark of $1,500 per ounce for the first time in five weeks,” Eugen Weinberg at Commerzbank said. “This is probably largely due to the strong rebound of the US dollar.” The US dollar rose to 1.414 versus the euro, which was again battered by concerns that an imminent vote by the Greek parliament on new austerity measures will find some obstruction after the conservative opposition attacked IMF and EU calls for unity. Last week, Greek finance minister Evangelos Venizelos agreed a plan for extra tax rises and spending cuts to plug a funding gap of 3.8 billion euros in exchange for a second bailout package worth 120 billion euros. But this will not go through unless parliament approves it on Wednesday - failure to get approval would see the EU and IMF refuse to pay out the July tranche of the rescue plan. Datawise, the US core PCE price index, personal incomes and personal spending are scheduled for release today, while key releases later in the week include CPI inflation readings for Germany, the EU and Japan, EU and US manufacturing PMI and US consumer confidence. Among other precious metals, silver fell to its cheapest since May 17 at $33.55 overnight, a loss of 73 cents or 2.1 percent - it was last at $34.02/34.07 per ounce, still down 26 cents. The metal fell nearly five percent last week on investor risk aversion and worries that a fragile global economy will diminish its industrial attributes. “Silver appears to have met some short-term targets on the downside - we could see moves back to the $34.50 level as far as we hold above the $33.55 level; however, the big picture looks negative,” a trader said. Elsewhere, platinum recovered from an earlier three-month low of $1,665 per ounce but remained in negative territory at $1,679/1,684, down $3. Sister metal palladium fell $2 to $728/734 per ounce. The metal also fell to a fresh one-month low of $723 earlier. In the near term, the PGMs are expected to remain under pressure, with investors waiting for US auto sales figures at the end of the week. “The current sell-off is largely sentiment driven as the physical market is tightening,” Credit Suisse said. “Hence, we see considerable recovery potential once macro sentiment starts to improve again.”

Source