Gold prices dipped on Monday, after posting their sharpest weekly rise in more than a month. Investors are using caution in trading just ahead of a meeting of European Union summit. Investors are hopeful the European finance ministers will hammer out a solid agreement on exactly how they plan to tackle the sovereign debt crisis that has engulfed the region for more than two years now.
Spot gold slipped 0.4% to $1,739.29 an ounce by 1212 GMT, after rising nearly 4% in the previous week.
U.S. gold fell 0.4% to $1,744.
“Should sentiment improve further in the market it wouldn’t be surprising if gold falls again, but it may also come under pressure if the rest of commodity sector comes under pressure,” Commerzbank analyst Eugen Weinberg said.
“It’s not performing as expected at the moment, but there is no reason to be worried yet. It’s not surprising after the last couple of weeks to see some profit taking.”
Gold has diverged somewhat from its traditional status as a safe haven from political and economic volatility in recent weeks, and has tended to move more in line with other commodities, like base metals.
Although there is still a lot of risk in Europe, gold prices are no longer reacting to it they way they used to.
Benchmark three-month copper on the London Metal Exchange was down 0.4% at around $7,855 per tonne.
Palladium outperformed the precious metals complex, rising 0.5% to $645.22, lifted by U.S. auto sales seeing a 14% rise in November, the fastest rate in almost two years. Palladium is used in the manufacture of automobile catalysts.
Platinum dipped 0.5% to $1,539.99 and silver rose 0.03% to $32.57.