Forexpros – Gold prices erased gains Thursday after rising on demand for the precious metal for use as a currency hedge thanks to ongoing geopolitical tensions in the Middle East and a waning stock rally in the U.S.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,612.05 a troy ounce early in Asian trade, down 0.04% after jumping in and out of both postive and negative territory.
Gold futures were likely to test support at USD1,594.05 a troy ounce, Wednesday’s low, and resistance at USD1,619.65, Wednesday’s high.
Iran continues to threaten to close the Strait of Hormuz to oil tankers in order to conduct military drills there, and despite U.S. insistence such talk will never come to pass, markets remain on edge, which has sent oil rising.
Stocks cooled a recent rally fueled by stronger-than-expected manufacturing data, and with higher oil prices coinciding with waning stock rallies, investors snapped up gold early in Asian trading, especially amid rekindling European debt fears.
In Europe, Italy’s UniCredit financial institution placed a EUR7.5 billion rights issue at a steep discount, which raised concerns that other banks will run into difficulties raising capital should the need arise.
Also residual talk that U.S. Federal Reserve will stick with low interest rates longer than expected and possibly roll out a third round of quantitative easing, which are assets purchases from banks designed to flood the financial system with liquidity, added to demand for gold, which tempered on and off a bit in early trading.
Elsewhere on the Comex, silver for March delivery rose 0.14% to trade at USD29.14 a troy ounce, while copper for March delivery traded up by 0.47% to trade at USD3.44 a pound.
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