Gold Falls Modestly as Eurozone Looks to IMF for Survival

Gold prices fell modestly Wednesday after eurozone finance ministers said there are only 10 days left to save the monetary union from financial catastrophe.

Tuesday's meeting in Brussels produced a detailed plan for leveraging the European Financial Stability Facility so it will insure the first 20 percent to 30 percent of new bonds issued by debt-choked members whose bonds now require record high yields.

The hope is that the EFSF guarantee, which takes effect in January, will attract foreign investors and keep the now two-year-old sovereign debt crisis from collapsing the Eurozone.

But officials were not sure exactly how big the EFSF would be or if foreign investors would be willing to buy eurozone bonds.

It may all be too little too late, as Rabobank said in a note, given that the cost to Spain, Italy and even France - Europe's third largest economy - have climbed to record levels that cannot be sustained.

Despite having managed to agree on boosting the EFSF, eurozone officials are now looking to the International Monetary Fund for the financial firepower to preserve the monetary union.

We are now entering the critical period of 10 days to complete and conclude the crisis response of the European Union, Economic and Monetary Affairs Commissioner Olli Rehn told Reuters Wednesday morning as EU ministers met.

The upshot of the gloom reversed the three-day rally of European stocks, with all major equity indexes lower in early trading. The euro fell against both the dollar and the yen.

Crude oil rose, which helps gold prices, on tensions in oil-producing regions. Iranian protesters stormed the British Embassy in Tehran, and Sudan decided to cut off South Sudan's oil exports by closing its main crude oil pipeline.

The effect of the rising oil prices kept gold's decline well under 1 percent.

In the U.S., futures of the Dow Jones Industrial Average, Nasdaq 100 and S&P 500 futures all pointed to a weaker open.

Gold for February delivery slipped $7.50 to $1,711.40, while spot gold rose $6.09 to $1,717.66.

Silver for March delivery declined 47 cents to $31.48, while spot silver fell 28 cents to $31.62.