Gold dropped for the second day as the Greek Prime Minister call for a referendum on the euro area’s latest bailout package ignited fears, thereby damping demand on commodities and shares. The announcement by Papandreou ignited fears after the debt relief accord announced last week by European leaders which included that private sector bondholders will bare 50% losses of Greek debt to cut it by 100 billion euros, while leveraging the firepower of the EFSF to 1 trillion euros from the current 440 billion euros. In the case of the rejection of the bailout, the debt-laden country would be vulnerable to a default. Concerns aggravated in markets this week amid worries regarding the implementation of the measures announced by European leaders last week. Moreover, fundamentals increased doubts regarding global recovery as China's PMI manufacturing showed an ease in expansion to 50.4 in October from 51.2. By the same token, U.S. manufacturing sector growth slowed to 50.8 in October from 51.6. Eyes will be on the G-20 leaders as they meet in Cannes, France, on Nov. 3-4 to continue their discussions on the repercussions of the financial crisis on global markets. The BoJ took a unilateral monetary action on Monday, the third intervention in the FOREX market this year, causing the greenback to advance against a basket of major currencies. The downbeat sentiment boosted the dollar against majors which eroded the demand on dollar-denominated commodities. The U.S. dollar rebounded sharply for the third day after falling over the previous four weeks. The dollar index, which tracks the greenback's movements versus six major currencies, is currently hovering around 77.33 compared with the day's starting level of 76.47. Spot gold is traded around $1706.28 an ounce after recording a low $1681.13 and a high of $1723.97. Crude oil for December delivery retreated to trade around $90.65 barrel compared with the day's starting level of $92.57.
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