Forexpros – Gold futures spiked higher on Wednesday, trading above USD1,790 an ounce after the European Central Bank allotted a record amount of loans to European lenders at a refinancing operation earlier in the day.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,790.25 a troy ounce during European morning trade, climbing 0.23%.
It earlier rose by as much as 0.35% to trade at USD1,792.15 a troy ounce, the highest since November 14.
Futures were likely to find support at USD1,767.25 a troy ounce, Tuesday’s low and short-term resistance at USD1,796.45, the high from November 14.
The ECB allotted EUR530 billion to 800 European lenders in its second offer of unlimited three-year loans earlier in the day. Market expectations for the size of the operation were in a range of EUR200 billion to as high as EUR1 trillion.
The ECB’s first liquidity operation in late December totaled EUR489 billion, with only 523 banks participating.
German lender Commerzbank said in a report earlier that, “If some of that money flows into commodity markets, that will push up prices.”
Gold can benefit from such an environment of easy money because of expectations that ample liquidity would put a damper on the value of paper currencies and boost inflation.
Following the ECB’s cash injection, market attention will turn to Federal Reserve Chairman Ben Bernanke’s semi-annual testimony on monetary policy before the House Financial Services Committee.
His comments will be closely watched for any hints regarding further easing measures.
Gold prices have rallied nearly 14% since the beginning of 2012, boosted by growing expectations for further monetary easing measures from global central banks.
Elsewhere on the Comex, silver for May delivery rose 0.32% to trade at USD37.32 a troy ounce, while copper for May delivery gained 0.75% to trade at USD3.951 a pound.
Silver prices have rallied almost 34% since the beginning of the year, while monthly gains for February are set to top 11%.
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