Forexpros – Gold futures fluctuated in choppy volatile trade on Tuesday, tracking movements in the currency market as traders continued to monitor the euro zone’s debt crisis and awaited further developments surrounding Greece.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,724.05 a troy ounce during U.S. morning trade, easing down 0.05%.
The April contract traded between a range of USD1,729.65 a troy ounce, the daily high and a session low of USD1,713.95, which was also the lowest since February 10.
Futures were likely to find support at USD1,706.85 a troy ounce, the low of February 10 and resistance at USD1,735.25, Monday’s high.
Gold prices moved in tandem with the euro on Tuesday. Although the precious metal is often seen as a safe haven during times of economic uncertainty, the increasingly grave debt crisis in the euro zone has done little to buoy appetite in gold in recent months.
A weakening euro and stronger dollar have weighed on gold instead. Gold remains more sensitive to moves in the euro/dollar exchange rate in the short term than to rising risk aversion, which in the past has been a positive driver of prices.
The single currency was pressured earlier after Moody’s downgraded the credit ratings on six European countries, including Spain and Italy late Monday. France and Austria kept their top ratings but had their outlooks dropped to “negative” from “stable.”
Moody’s also cut its ratings on Portugal, Slovakia, Slovenia and Malta, while warning that it could downgrade top-rated U.K., rekindling contagion worries.
Investors were also jittery amid uncertainty over Greece’s debt woes. Attention now shifts to a meeting Wednesday of euro zone finance ministers, who will discuss the approval of the debt-laden country’s second bailout before a March 20 deadline.
Greece has a EUR14.5 billion bond repayment due on March 20 and requires the bailout funding in order to be able to make that payment and avoid a messy default.
Sentiment briefly strengthened earlier after a report showed that German economic sentiment rose significantly more-than-expected in February, turning positive for the first time since May 2011.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.4% to trade at 79.39.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Elsewhere on the Comex, silver for March delivery fell 0.23% to trade at USD33.64 a troy ounce, while copper for March delivery tumbled 1.27% to trade at a one-week low of USD3.791 a pound.
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