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Gold drops as Cyprus strikes bailout deal with creditors

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Investing.com - Gold prices dropped to near 1-week lows after Cyrpus secured EUR10 billion in rescue funding from European neighbors and the International Monetary Fund, which sparked an earlier global rally in equities markets that came at gold's expense.

Gold prices rose in recent sessions on demand from investors looking for hard assets to hedge against a weakening euro on fears Cyprus was set to abandon the euro.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery were down 0.23% at USD1,604.25 a troy ounce in U.S. trading on Monday, up from a session low of USD1,590.85 and down from a high of USD1,614.45 a troy ounce.

Gold futures were likely to test support USD1,590.80 a troy ounce, last Monday's low, and resistance at USD1,615.80, Thursday's high.

Earlier Monday, eurozone finance ministers and the International Monetary Fund approved a EUR10 billion rescue package for Cyprus provided the country close up its second-largest lender, Laiki Bank.

The bailout deal guaranteed that accounts holding up to EUR100,000 will continue to be insured and likely shifted to another financial institution, though larger depositors and bondholders in the bank may face losses.

Terms of the bailout sent the euro moving up and down as markets digested the fallout, including fears that future bailouts in the eurozone may call for bank restructurings.

Still, stock markets rose earlier, which enticed investors out of gold, the safe-haven asset of choice amid uncertainty in Cyprus.

Stocks erased those gains, though gold continued to trade lower in afternoon trading on Monday as investors chased nicely priced dollar positions in search of safety.

Elsewhere on the Comex, silver for May delivery was up 0.32% at USD28.790 a troy ounce, while copper for May delivery was down 0.55% and trading at USD3.447 a pound.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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