Gold Prices Slip Amid European Reopenings, Dollar Strength By

© Reuters.

By Geoffrey Smith — Gold prices slipped on Monday as signs of economic life in Europe encouraged a friendlier tone towards risk assets and dampened demand for havens.

By 9:26 AM ET (1326 GMT), for delivery on the Comex exchange were down 0.5% at $1,726.85 a troy ounce, while was down 0.4% at $1,727.97.

With European equity markets buoyant and with simmering tension between the U.S. and China keeping the dollar well bid, gold has been under pressure for most of the day.

Nick Frappell, general manager of ABC Bullion in Sydney, said in a weekly preview Monday that he expects it to drift down to support around $1,710-1,712 in the short term, testing  the current pennant formation and possibly paving the way for a bullish breakout.

were also down, by 0.7%, at $17.58 an ounce, after data from the Commodity Futures Trading Commission showed that net speculative long positions hit their highest since early April last week.

were down 0.1% at $885.85 an ounce.

Gold was supported moderately by sustained doubts about the fate of a Franco-German proposal for the EU to borrow in its own name and distribute grants to member states worst hit by the coronavirus. Analysts have said the proposal, if accepted, could be a game-changer for the assessment of sovereign risk in the euro zone, by signalling a greater willingness to support poorer and more highly-indebted countries.

However, the loose coalition of the Netherlands, Finland, Austria and Sweden over the weekend issued a critical response to the proposal, insisting that aid be distributed in the form of loans rather than grants. Paul Donovan, chief economist with UBS Global Wealth Management, said in a morning note that he expects the final compromise to resemble the Franco-German proposal more. The EU Commission is due to produce its own proposals later this week.

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