Gold rebounded on Monday trading, taking advantage of the dollar's weakness, after Merkel and Sarkozy said on Sunday they will introduce a plan by the end of the current month that would ease the effect of the European debt crisis. Spot gold is traded around $1663.60 an ounce after recording a high of $1670.87 and a low of $1637.54. Merkel-Sarkozy meeting that took place in Berlin came out with an agreement between the leaders among certain goals to mitigate the effect of the European debt crisis which is threatening the region's well being. The talks included the introduction of new measures to alleviate the Greek debt dilemma, recapitalize banks capital and speed up economic coordination in the euro area, through making amendments to the Lisbon Treaty, by the end of the current month, probably before the G20 summit in Cannes on November 3-4. Accordingly, the dollar fell sharply to touch a low of 77.50 compared with the day's opening level of 78.71, according to the dollar index which tracks the dollar movements against a basket of major currencies. Crude oil also took the chance to climb for the fifth straight session to touch a high of $7985.53 a barrel from the day's starting level of $82.93. Gold fell last month from its all-time high of $1920.92 due the rising pressure from the dollar which became the most favorite safe haven lately amid interventions from the SNB and the BoJ to weaken their currencies. The yellow metal fell on Friday after the non-farm payrolls report showed that the U.S. economy created 103,000 jobs in September, better than forecasts of 60,000 jobs while the August's reading was revised up to 57,000 from no jobs. As long as there is improvement in the U.S. data along with the ease in euro area debt concerns, gold may take advantage of the dollar's drop yet it may face some downside pressure as investors will probably leave it as a refuge. On the other hand, with the announcement of new stimuli by some central banks to beef up their economies, inflation might rise again the coming period which may give the chance some demand as an inflation hedge.
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