Commodity News – Gold retraces after hitting record high early in European session

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Gold retreated from fresh record highs reached in the European session , where it hit $1,609.83. The precious metal retraced slightly to $1,597.33, as improved risk sentiment took some of the appetite out of safe haven assets.

The mild pull-back is expected to be short-lived due to heightened concerns that the debt crisis engulfing Greece may ensnare Italy and Spain, and as time grew short for raising the U.S. debt ceiling.

“People are just stepping back … maybe for a day or two, but I think we will end the week easily over $1,605, and quite possibly over $1,610 for the same reasons why we are here,” said Zachary Oxman, managing director with TrendMax in Encinitas, California.

“ We are going to end the week with the same concerns that we came into the week with, and people realize that. When it dipped into $1,599, you have seen a lot of buying come in, so people are still accumulating, whereas others are rotating and taking some short-term profit” , she added.

Nervousness remains in the financial markets given divisions among policymakers ahead of Thursday’s euro zone summit, with few expecting a permanent solution to the region’s debt crisis.

U.S. President Barack Obama and top lawmakers are also facing more pressure for a debt deal amid a growing sense that a last-ditch plan taking shape in Congress may be the only way to avoid a devastating U.S. default.