Gold advanced on Monday trading after France's successful bond selling managed to offset the negative impact of the S&P downgrade to a number of euro area countries over the week end, pushing demand on commodities and shares. Spot gold is currently traded slightly higher around $1642.87 an ounce, after recording a high $1646.87 and a low of $1631.40. Today, France auctioned 8.59 billion euros of debt with lower yields; the government sold 4.503 billion euros of 12-week bonds with a yield of 0.165%, compared with 0.167% in the prior sale of 13-week notes last week. It also sold 2.192 billion euros of 25-week treasury bills which also saw a decline in borrowing cost to 0.281% versus 0.286% last week, where the 51-week bills showed a decline in yield to 0.406% from 0.454% in the prior auction. The successful bond selling offset the grim impact of the S&P downgrade to several euro area countries and Moody's threat that it will update France's top rating this quarter. Fears remained in markets today after the S&P downgrade on speculations the European Financial Stability Facility (EFSF) is at risk of facing a similar downgrade to its top rating and may face a reduction in its lending capacity of the EFSF to 180 billion euros, where this week the EFSF is set to auction 1.5 billion euros of six-month bonds. Also, this week Greece will resume talks with private sector debt holders, specifically on January 18 after the halt of the negotiations on January 13, to reach an agreement over the size of losses to be bared by creditors to avert a possible default as early as in March. Still the main focus remains on the euro, especially amid the lack of fundamentals from the United States due to Martin Luther King holiday and other major economies. Now, the dollar index, which tracks the greenback's movements versus six major currencies, is hovering around 81.43 compared with the day's opening of 81.68. On the other hand, crude oil is traded lower near $99.70 a barrel, showing some bullishness, compared with the day's opening of $98.92.
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