Forexpros – Gold futures rose sharply in their first trading session of 2012 on Tuesday, as a broadly weaker U.S. dollar and growing geopolitical tensions over Iran’s nuclear program boosted the appeal of the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,591.25 a troy ounce during early European morning trade, jumping 1.29%.
It earlier rose by as much as 1.44% to trade at a three-day high of USD1,593.55 a troy ounce.
Gold futures were likely to find short-term support at USD1,550.15 a troy ounce, Friday’s low and resistance at USD1,605.85, the high of December 27.
Comex trading remained closed on Monday due to the New Year’s holiday.
Gold’s gains came as the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, retreated 0.37% to trade at 79.98.
Dollar weakness usually benefits gold, as it boosts the metal’s appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Prices found further support amid reports Iran had produced its first nuclear fuel rod, boosting the safe haven appeal of the precious metal. Nuclear fuel rods contain pellets of enriched uranium that provide fuel for nuclear power plants.
The report came after the Islamic Republic said it had test-fired two long-range missiles over the weekend as part of an ongoing naval drill in the Strait of Hormuz.
Meanwhile, investors were eyeing a series of important events this month, including German and French bond auctions later in the week.
French President Nicolas Sarkozy and German Chancellor Angela Merkel are also due to meet on January 9 in order to discuss new rules to enforce budget discipline across the European Union.
Elsewhere on the Comex, silver for March delivery rallied 1.75% to trade at USD28.47 a troy ounce, while copper for March delivery rose 1.45% to trade at USD3.482 a pound.
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