Forexpros – Gold prices rose in early Asian trading Monday, buoyed by a weaker dollar, which was down after investors sold it for profits to invest in other asset classes like precious metals.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,716.45 a troy ounce, up 0.39%.
Gold futures were likely to test support at USD1,689.95 a troy ounce Wednesday’s low, and resistance at USD1,792.15, Wednesday’s high.
Gold trades inversely from the dollar, and the greenback rose in recent sessions on sentiment that the U.S. economy is improving on its own and doesn’t need assistance from the Federal Reserve in the form of quantitative easing.
Under quantitative easing, the Fed purchases assets from banks and floods the financial system with liquidity in the process with the aim of lowering interest rates and steering the economy away from a deflationary spiral.
As a side effect, the dollar weakens and gold strengthens, although waning expectations for quantitative easing sent the dollar rising in recent sessions.
Monday’s profit-taking made gold an attractive asset.
In the Europe, the ECB recently provided EUR529 billion in three-year loans to European banks after receiving bids from 800 institutions.
Easing measures such as that often send gold rising on sentiment that inflationary pressures could result.
Elsewhere on the Comex, silver for May delivery was up 1.04% and trading at USD34.883 a troy ounce, while copper for May delivery was up 0.53% and trading at USD3.927 a pound.
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