Forexpros – Gold futures were mildly higher during U.S. morning hours on Monday, as rising Spanish borrowing costs underlined concerns over euro zone’s ongoing debt crisis ahead of a meeting of euro zone ministers due to begin later in the day.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,585.65 a troy ounce during U.S. morning trade, gaining 0.45%.
The August contract traded in between a tight range of USD1,588.25 a troy ounce, the daily high and a session low of USD1,578.05 a troy ounce. Prices hit a one-week low of USD1,576.55 a troy ounce on July 6.
Gold futures were likely to find support at USD1,551.35 a troy ounce, the low from June 29 and near-term resistance at USD1,609.85, the high from July 6.
Gold’s safe haven appeal was boosted as the yield on Spain’s 10-year government bonds climbed to 7.11% earlier, above the 7% threshold, widely seen as unsustainable, ahead of a meeting of euro zone finance ministers later Monday.
Euro zone officials were expected to discuss a plan announced last month and designed to help the region’s indebted countries and their struggling banking systems.
Meanwhile, gold traders already shifted their focus to the release of the minutes of the Federal Reserve’s most recent policy meeting on Wednesday, which could show whether the central bank is leaning toward more stimulus to boost growth.
Gold traders watch the Fed minutes closely for hints of whether the central bank will engineer another round of asset purchases, or quantitative easing.
Gold prices lost almost 1.5% on Friday, after official data showed that the U.S. economy added just 80,000 jobs in June, below market expectations for a gain of around 90,000.
Although the employment report was weaker than expected, many investors said it was not bad enough to spur the Federal Reserve to launch a third round of quantitative easing.
Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would pump more money into the financial system.
Gold gained as much as 15% earlier this year to hit USD1,790 an ounce after the Fed said in January it would keep interest rates near zero until at least late 2014 and indicated that it could introduce a fresh round of asset-purchases.
However, prices have lost almost 12% since late February, as the Fed failed to deliver more easing and amid concerns over the euro zone’s deepening debt crisis, which has fueled demand for the precious metal’s hedge, the greenback.
Also Monday, government data released earlier in China showed that consumer price inflation accelerated at the slowest rate since January 2010 in June, potentially giving Beijing room to further ease monetary policy.
Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
Elsewhere on the Comex, silver for September delivery jumped 1.6% to trade at USD27.35 a troy ounce, while copper for September delivery added 0.3% to trade at USD3.421 a pound.
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