The ongoing decline in the precious metals complex continued overnight as a stronger dollar and a slightly lower euro coupled with losses in the Nikkei index conspired to keep sellers active and buyers less so.
Declining equity futures prompted by again rising fears about the quality of the economic recovery gave rise to more short covering and some fresh purchases of gold overnight. Bullion prices drew to within a couple of dollars of the $1,200 resistance.
Some price weakness continued to remain manifest in gold, and to a lesser extent in other precious metals, as the second trading week of 2011 got underway overnight. The near 4% loss in gold's value last week is also being tied to euro woes.
Commodity prices rose this morning along with the levels of optimism surrounding the euro-debt summit and along with the region's common currency. Gold and the euro have been BFFs of late, so the yellow metal also gained in value.
Spot bullion started the Tuesday session with a $12.50 rise to the $1,690 bid level as the US dollar fell about 0.23% on the trade-weighted index amid signs of the reaffirmation of the US' ratings despite the crumbling of the debt supercommittee.