Gold continued to face resistance around $1740+ levels as the US dollar maintained its gains and European equities opened on a mostly positive note ahead of a key meeting of the EU policymakers amid expectations that the European Central Bank (ECB) is due to cut its key lending rate by 25 basis points. The ECB is also expected announce additional liquidity measures given the persistent fears on the Eurozone debt impasse and shrinking economic activity. Gold had gained in the floor trading session in New York yesterday, bouncing from a low of $1719 per ounce as the recovery from one month low price of $1700 extended further. However, the metal seems to be facing some headwinds every time it runs up above $1740 per ounce mark. The US dollar surged to highs of 1.3390 against the Euro in Asian trading today, having already clocked a high of 1.3350 yesterday as reports trickled in stating that the Eurozone summit is unlikely to see a major coordinated move from the policymakers. The single currency had gained yesterday on reports that Eurozone official talks are focusing on the possibility of allowing the euro-zone's 440 billion euros ($590 billion) bailout fund to remain in operation when a new €500 billion facility comes into force in 2012. European leaders are due to meet in Brussels today for a two-day summit billed as crucial for the debt-stricken region. German Chancellor Angela Merkel and French President Nicolas Sarkozy have proposed broad treaty changes that would toughen fiscal rules and impose automatic sanctions on countries that violate budget limits. In last week of November, the Organization for Economic Cooperation and Development had state that the European Central Bank should loosen monetary policy again and may need to devise more radical nonstandard measures to save the euro-zone economy. Gold seems to be moving on its own right now. Earlier in the week, a new study released by the World Gold Council (WGC) stated that Gold has a strategic diversifying role roughly comparable to risky assets such as small caps and emerging markets over the long term. Gold does not appear to be a substitute for other assets but seems to add significant diversifying power due to its low or negative correlation with most other asset classes in an optimized portfolio context, the study noted. COMEX Gold is quoting at $1742, down $3 on the day for the benchmark February 2012 futures. The metal had topped two-week highs above $1760 per ounce last week. The MCX Gold futures have moved in a relatively tight range today, coming off from highs of Rs. 29344 per 10 grams and currently linger at Rs. 29291, up Rs. 44 or 0.15% o the day.

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