Forexpros - Gold futures advanced on Monday as the safe haven appeal of the yellow metal increased after Standard & Poors downgraded multiple euro zone nations and the European Financial Stability Fund.   

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1643.85 a troy ounce during late U.S. trade advancing 0.80%.   

It earlier hit a high of USD1647.45 climbing 1.05%.   

Gold futures were likely to find support at USD1625.85 a troy ounce, Friday's low and technical resistance exists at USD1662.85, the high of January 12.   

Weakness in the U.S. dollar usually works to lift precious metal prices.  The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gave back 0.08% to trade at 81.66.   

Interestingly, gold's correlation with the euro/dollar exchange rate is at its most positive in nearly 2 years. This means that gold is more likely to move in synch with the euro than at any other time since January 2010.   

Standard & Poor's downgraded France to AA+ from AAA with a negative outlook on Friday. 

The rating agency also slashed Cyprus, Portugal, Italy and Spain two levels.  

Long term credit ratings were also lowered on Austria, Malta, Slovakia, and Slovenia.   

However, Germany, Ireland, Finland, Belgium, Estonia, Netherlands, and Luxembourg had their rating affirmed by S&P.   

S&P even announced a downgrade of the AAA rating of the euro zones bailout fund, EFSF to AA+, earlier in the session  

The French sale of 51 week treasury bills met with weak investor demand.   

However,  French borrowing costs dropped as the country sold eur1.895 billion of one year notes at a yield of 0.406%, down from 0.454% on January 9th.   

Witold Bahrke of PFA Pension A/S explained to Bloomberg, "Rating downgrades are always a bit of old news and everybody already anticipated the move from S&P, but a positive is that President Sarkozy will have less leverage against Chancellor Merkel who's getting more room to push her agenda. We have seen a series of indicators showing macro economic conditions have improved."   

Greek officials will reconvene with creditors on January 18th after the talks stalled last week increasing default fears.  .    Elsewhere on the Comex, silver for March settlement advanced 1.41% to trade at USD29.94 a troy ounce, while copper for March settlement climbed 1.04% to trade at USD3.68 a pound.

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