By Virginia Harrison and Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — Gold futures tumbled on Monday, as a stronger dollar took a toll on commodities across the board.
More than doubling losses seen in Asian trading hours, gold for December delivery GCZ2 -1.00% sank $18.70, or 1%, to $1,759.30 an ounce on the Comex division of the New York Mercantile Exchange during European trading hours.
The metal posted a 0.3% gain last week after the U.S. Federal Reserve’s latest round of quantitative easing, and policy action by central banks in Europe and Japan, encouraged buyers.
Gold is viewed as a safe store of value and tends to benefit from expectations of currency debasement.
Frederic Panizzutti, senior vice president at MKS Group, said gold losses have been triggered by a correction on the euro versus the dollar.
The euro EURUSD -0.4874% fell to $1.29076 from $1.2989 late Friday.
The ICE dollar index DXY +0.37% , which measures the U.S. unit against a basket of six major rivals, jumped to 79.650 from 79.278 in North American trade late Friday.
A stronger greenback is negative for dollar-priced commodities including metals as it makes them more expensive to holders of other currencies.
Support levels
The next support levels for gold are $1,722 and $1,725, said Panizzutti, but he doesn’t think those will be tested. “The market sentiment remains positive. Any euro recovery, which is likely, might prompt gold buying,” he said.
His short- to medium-term target remains $1,800 an ounce. “Quantitative easing in the U.S. will continue to keep the dollar weak against the euro and this shall support the gold trend,” he said in emailed comments.
The euro fell amid a jittery European environment, with investors awaiting an important week for Spain. Read Spain: What investors need to know
The Greek government denied reports the country must close a bigger-than-expected €20 billion ($26 billion) budget shortfall to meet international lender requirements. Read: Greece denies €20 billion budget shortfall
BarCap lifts outlook
Strategists at Barclays Capital revised up their fourth-quarter 2012 gold price forecast to $1,810 an ounce, and average 2013 forecasts to $1,860 an ounce.
“Real interest rates remaining negative for longer also bodes well for gold, particularly as concerns over inflation have started to build, given that (the Federal Reserve) asset purchases are open ended and focused on labor conditions,” the strategists said.
The broader metals complex tracked gold lower.
December copper futures HGZ2 -1.56% slipped 6 cents, or 1.5%, to $3.75 a pound.
Silver futures for the same month delivery SIZ2 -2.23% fell 87 cents, or 2.5%, to $33.77 an ounce.
October platinum futures PLV2 -1.66% gave up $29.30, or 1.8%, to $1,608.30 an ounce.
Palladium for December delivery PAZ2 -4.53% tumbled $30.80, or 4.6%, to $640.75 an ounce.
Virginia Harrison is a MarketWatch reporter based in Sydney.
