Investing.com - Gold prices rose in U.S. trading on Monday amid safe-haven demand after Cyprus said it would levy taxes on bank deposits.
The move marks the first time a eurozone bailout addressed the sanctity of bank deposits, which weakened the euro and sparked demand for gold, often a hedge of choice when paper currencies roil.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were up 0.81% at USD1,605.50 a troy ounce in U.S. trading on Monday, up from a session low of USD1,590.80 and down from a high of USD1,610.20 a troy ounce.
Gold futures were likely to test support USD1,590.80 a troy ounce, the earlier low, and resistance at USD1,619.40, the high from Feb. 26.
The one-time tax taking aim at Cypriot bank deposit holders as part of a EUR10 billion bailout deal sent the euro falling amid fears unease may grow since smaller depositors will be affected, which sparked a rally in gold markets.
The move also spooked investors on sentiment that an era of eurozone bailouts that avoided touching bank deposits may now be ending.
The euro erased earlier losses and found some support after parliament delayed voting on the measure and possibly soften the blow on smaller depositors, though demand for gold held steady.
Russia was quick to criticize the move in Cyprus, home to large amounts of Russian deposits.
Elsewhere on the Comex, silver for May delivery was up 0.06% at USD28.868 a troy ounce, while copper for May delivery was down 2.62% and trading at USD3.428 a pound.