By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — Gold futures traded little changed Tuesday, as hopes the U.S. will reach a deal to solve its fiscal-cliff issues lent support, while a downgrade to France’s credit rating dented investor optimism.
Gold futures for December delivery GCZ2 -0.02% slipped 60 cents to $1,733.80 an ounce.
The muted action follows a rally of nearly $20 an ounce Monday, when optimism over progress to avert the U.S.’s looming spending cuts and tax hikes sent the dollar lower and helped lift demand for dollar-denominated commodities.
A weaker greenback also helped curb losses on Tuesday, with the ICE dollar index DXY -0.26% inching lower to 80.834 from 80.854 in late North American trade Monday.
Metals traders also kept an eye on developments in the Middle East as they awaited a meeting of euro-zone financial ministers expected to focus on Greece.
“It is fair to say that the market remains bullion positive in the long run, but in the near term much depends on global risk sentiment and the U.S. dollar trade,” said Andrey Kryuchenkov, commodity analyst at VTB Capital.
“At the same time, risk aversion is not extreme enough to trigger safe haven buying while inflation expectations remain anchored for now (though we expect this to change later into 2013),” he wrote in a note.
Worries over France, however, hampered risk sentiment, after Moody’s Investors Service late Monday lowered the country’s credit rating by one notch, to Aa1 with a negative outlook. The credit-ratings firm said that the country’s “long-term economic growth outlook is negatively affected by multiple structural challenges.” See: Moody's strips France of its triple-A rating
The move stirred selling in European equities with the Stoxx Europe 600 index XX:SXXP -0.19% down 0.2% to 268.19. Stock futures turned lower on Wall Street. See: Stock futures flat; H-P, housing starts in focus
Other metals futures also were on the decline early Tuesday.
Silver for December delivery SIZ2 -0.31% slipped 0.1% to $33.15 an ounce, while copper for the same month HGZ2 -0.37% gave up 0.1% to $3.52 a pound.
December palladium PAZ2 -0.47% fell 0.5% to $641.95 an ounce, while platinum for January delivery PLF3 -0.25% dropped 0.4% to $1,577.20 an ounce.
Sara Sjolin is a MarketWatch reporter, based in London.
