London 12/07/2011 - Gold prices fell alongside the euro on Tuesday morning, with worries about the growing European debt crisis hurting the markets and persuading investors to exit positions. Spot gold fell $6.50 to $1,545.20/1,546.00 per ounce. The metal rose to a three-week high of $1,557.20 in the previous session, when sovereign debt concerns across Europe triggered some safe-haven buying. But weaker technical signals - gold failed to break resistance above $1,558 - weighed on prices towards the end of the session. On the charts, the next support level is pegged at $1,541 and then $1,524, while resistance stands at $1,552. Gold set new all-time highs in other currencies earlier - it reached 1,118 per ounce in euro terms and 979.90 per ounce in sterling terms - and multi-week peaks in the rupee and Canadian dollars. “Gold reaffirms its safe haven status, with our short-term targets of $1,553 being met - the picture is mixed now but expect moves back to test the highs yesterday,” a broker said. “A failure to break higher than those levels may leave gold looking overextended in the short term,” it added. “Expect the market to focus on Italian and Spanish commentary in the absence of other factors.” Dollar-denominated gold, usually seen as a safe haven in times of crisis, was kept in check today by a stronger US currency, which benefitted from a flight to safety on news that European debt problems are spreading quickly to core economic countries. “[But] while gold prices may fall in the event of a crisis, gold prices are also likely to be one of the first instruments to recover,” broker Fairfax noted. The euro fell to 1.383 against the US dollar, its lowest since mid-March. “Dramatic declines could be there for the euro in coming weeks, which could also weigh on gold in the short term,” a trader said. A second day of talks between eurozone finance minsters is scheduled for today - delegates will attempt to stave off a potential Greek default, although a co-ordinated plan between officials remains elusive, and tackle an escalating fiscal crisis in Italy. On the data front, US trade balance and IBD/TIPP economic optimism numbers are due this afternoon, as are the latest FOMC minutes, which will be scrutinised for clues over the Fed’s stance on possible further quantitative easing measures there. Among other precious metals, silver fell below $35 again, retracing from a one-month high of $36.93 hit in the previous session. It was last at $35.13/35.19 per ounce, down 65 cents. Platinum fell to a 10-day low of $1,707 per ounce at one stage before settling at $1,713/1,723, still down $15. Palladium also dropped to its worst since July 1 at $750 at one point and then settled at $753/759, down $15 or 1.9 percent. “With risk aversion dominating market sentiment in the near term, performance in PGMs and silver may remain subdued in the days ahead while sovereign debt woes are likely to direct fresh interest into gold,” broker Credit Suisse said.

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