Gold Prices Surge on Europe Confidence (Update 1)

Updated from 10:29 a.m. EDT with settlement prices

NEW YORK (TheStreet) -- Gold prices soared Tuesday on renewed optimism that Europe's leaders are prepping more moves to confront the region's debt problems.

Gold for December delivery jumped $19.90 to settle at $1,642.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,643.60 and as low as $1,620.80 an ounce, while the spot price was climbing $18.60, according to Kitco's gold index.

Gold was charging higher after borrowing costs declined at Spain's successful auction of 4.5 billion euros -- virtually a full allotment -- of one-year treasury bills.

Another positive was prospects that Germany would offer small concessions to Greece as Prime Minister Antonis Samaras has proven serious about meeting the various targets set by Germany for its bailout program, according to Bloomberg.

"This one [Spanish bond auction] was pretty good, so I think more confidence is coming into the eurozone," said Phil Streible, senior commodities broker at RJO Futures.

Silver prices for September delivery settled up 84 cents to $29.43 an ounce, while the U.S. dollar index was dropping 0.72% to $81.86.

The spike into the $1,640 an ounce range pushes the gold price up against a psychological level that many technical analysts believe could be the new support for a rally if it holds.

The euro jumped higher against the greenback to $1.2476, up from Monday's late price of $1.2345.

German Chancellor Angela Merkel plans to meet on Friday with Greece's Samaras, who is expected request an extension for the country to fulfill its fiscal objectives.

Australia's central bank left the country's benchmark interest rate unchanged at 3.5% on Tuesday. The Reserve Bank of Australia's decision shows confidence in its domestic economy, regardless of global pressures.

Gold mining stocks were mostly higher Tuesday. Eldorado Gold (EGO) was rising 5.5%, while Kinross Gold (KGC), Barrick Gold (ABX) and Yamana Gold (AUY) were up 2%, 2.1% and 3.5%, respectively.

-- Written by Joe Deaux in New York.

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