Forexpros – Gold futures inched lower in rangebound trade during European morning hours on Wednesday, as most traders stuck to the sidelines ahead of the start of Thursday’s European Union summit in Brussels.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,570.95 a troy ounce during early European trade, shedding 0.25%.
The August contract traded in between a tight range of USD1,568.85, the daily low and a session high of USD1,575.35 a troy ounce.
Gold futures were likely to find support at USD1,546.35 a troy ounce, the low from June 1 and near-term resistance at USD1,605.25, the high from June 21.
Investors remained cautious ahead of a European Union summit due to begin on Thursday, amid growing skepticism over whether European leaders will make any progress towards greater fiscal integration and allowing the bloc’s rescue funds to buy government debt.
Earlier in the week, German Chancellor Angel Merkel quashed hopes that the euro zone could issue joint euro bonds, saying the idea was “economically wrong” and “counterproductive.”
Meanwhile, the yield on Spanish 10-year bonds was at 6.87%, hovering close to the critical 7% threshold that prompted Greece, Ireland and Portugal to seek international bailouts.
On Tuesday, Spain saw short-term borrowing costs rise sharply at an auction of government debt in the wake of a mass downgrade of Spanish banks by ratings agency Moody’s, after Madrid formally requested aid of up to EUR100 billion for its banks.
Although gold’s appeal as a safe haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal in recent months.
A weakening euro and stronger dollar have weighed on gold instead, as the precious metal has been moving in tandem with riskier assets since hitting a record high of USD1,920 last September.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.1% to trade at 82.62.
Gold has lost some of its safe haven appeal to the dollar, U.S. Treasuries and German Bunds, partly as a strengthening dollar makes the metal less attractive to buyers holding other currencies.
Elsewhere on the Comex, silver for September delivery fell 0.3% to trade at USD27.02 a troy ounce, while copper for September delivery eased down 0.1% to trade at USD3.318 a pound.
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