Forexpros – Gold futures surged the most in 10 weeks after Iran announced progress in its nuclear program and the U.S. dollar plunged.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1606.65 a troy ounce during late U.S. trade surging 2.27%.
It earlier hit a high of USD1608.55 and a low of 1567.65.
Gold futures were likely to find support at USD1561.69 and technical resistance exists at USD1608.55.
Weakness in the U.S. dollar added to the bullish precious metal price environment.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gave back 0.65% to trade at 79.93.
Dollar weakness generally lifts commodity prices, as it increases their appeal as an alternative asset and makes dollar priced commodities cheaper for holders of other currencies.
The Institute for Supply Management’s U.S. factory index advanced more than expected, as well as Chinese and Indian metrics, providing bullish signals for economic growth.
The Iranian Student News Agency reported that Iran tested its first nuclear fuel rod adding to oil supply fears, while the nation warned the U.S. against sending an aircraft carrier to the Persian Gulf.
Adam Klopfenstein of Archer Financial explained to Bloomberg. “Fear trade is back because of Iran. Also, we are seeing buying across commodities because of the weaker dollar.”
For much of the last year, investor’s typical reaction to bad news from Europe was to buy gold, as its boosts safe haven appeal of the precious metal, but that relationship has unraveled recently.
Instead, gold futures have moved largely in line with other commodities and risk assets over the past month, with investors preferring the relative safety of the U.S. dollar.
Elsewhere on the Comex, silver for March delivery soared by 5.95% to trade at USD29.64 a troy ounce, while copper for March delivery traded higher by 2.69% to trade at USD3.53 a pound.
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