Forexpros – Gold futures edged modestly higher in choppy trade Tuesday, as the safe-haven appeal of the precious metal was boosted as investors continued to focus on rising borrowing costs for Spain and Italy.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,580.05 a troy ounce during U.S. morning trade, adding 0.2%.
The August contract traded in between a range of USD1,571.45 a troy ounce, the daily low and a session high of USD1,583.65 a troy ounce.
Gold futures were likely to find support at USD1,554.55 a troy ounce, the low from July 12 and near-term resistance at USD1,591.35, the high from July 19.
Market sentiment was hit by fears that Spain will be the next country in the euro zone to require a full-scale bailout after the yield on Spanish 10-year bonds rose to a euro-era high of 7.60%, well above the 7% threshold considered unsustainable if a country is to remain solvent.
Similar-maturity Italian yields rose to 6.5% for the first time since January.
Markets also remained jittery after ratings agency Moody’s revised its outlooks on the sovereign ratings of Germany, the Netherlands and Luxembourg to negative from stable. Moody’s rates all three at AAA.
Downbeat manufacturing reports out of the euro zone further weighed. Data released earlier in the session showed that manufacturing activity in Germany slowed to the lowest level in more than three years in July.
Separate reports showed that manufacturing activity in the euro zone contracted at the fastest pace since May 2009 in July, while the French manufacturing sector contracted at the fastest pace in 38 months.
The weak euro zone data offset a report showing that China’s HSBC manufacturing purchasing managers index improved to 49.5 in July, its highest level since February, from a final reading of 48.2 in June.
While the index remained below the 50 level which indicates contraction, the improvement from the previous month eased concerns over a slowdown in the world’s second largest economy.
From a technical standpoint, the yellow metal has been trading rangebound since early May.
Gold has been moving between USD1,527 and USD1,655 in the past three months. The precious metal has dropped toward or briefly below USD1,570 an ounce several times last week but managed to hold each time.
Elsewhere on the Comex, silver for September delivery eased down 0.1% to trade at USD27.01 a troy ounce, while copper for September delivery dipped 0.2% to trade at USD3.373 a pound.
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