Investing.com -- Gold futures plummeted on Monday experiencing their worst one-day decline in more than three weeks, amid increased optimism of a breakthrough in longstanding Greek Debt negotiations.
On the Comex division of the New York Mercantile Exchange, gold for August delivery plunged 17.40 or 1.45% to $1,184.50 a troy ounce. Gold traded between 1,181.70 and 1,199.80 on the first day of trading this week. Gold futures fell precipitously in U.S. morning trading after remaining steady above 1,190 earlier in the session.
Gold likely gained support at 1,171.80, the low from June 9 and was met with resistance at 1,205.70, the high from June 18. In Brussels, Greece presented a broad, comprehensive proposal to its international creditors, which reportedly included concessions on early retirement and Value Added Taxes on electricity. In addition, Greece reportedly moved closer to agreeing to creditors' demands for a target budget surplus of 1% for this year, 2% next year and up to 3% in 2017, BBC reported. The developments stoked optimism among participants that a deal could be reached at a potential euro group meeting on Thursday.
"We will work very hard in the next few days, the institutions with the Greek government, to get that deal this week," said Netherlands finance minister Jeroen Dijsselbloem, the head of the euro group of finance ministers.
Reports also indicate that any deal will not include debt relief for Greece, as well as comprehensive pension cuts. Greece prime minister Alexis Tsipras held a series of talks with a host of European Union leaders, as well as European Central Bank head Mario Draghi and International Monetary Fund head Christine Lagarde before Monday night's emergency summit.
A temporary deal could unlock critical aid deemed necessary for Greece to stave off bankruptcy ahead of a €1.5 loan repayment due to the IMF on June 30. At the same time, the final €7.2 billion tranche of a €240 billion bailout could expire if Greece doesn't reach an accord by the end of the month.
Stocks throughout Europe surged on Monday in response to the encouraging reports. The German Dax index closed up nearly 4%, while a host of Italian banks ended Monday up 5% on the session. Italy could be threatened by contagion throughout the euro zone if Greece defaults on its debt and leaves the euro.
Gold is viewed as a safe haven for investors in periods of severe economic instability.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, ticked up 0.20% to 94.50, as U.S. existing home sales surged 5.1% in May. Dollar-denominated currencies such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for July delivery gained 0.003 or 0.02% to 16.112 a troy ounce.
Copper for July delivery fell 0.004 or 0.15% to 2.565 a pound.