Forexpros – Gold futures slumped lower on Thursday as the U.S. dollar rallied on increased euro zone debt fears.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1535.55 a troy ounce during mid U.S. trade plunging 1.83%
It earlier hit a high of USD1562.65.
Gold futures were likely to find short term support at USD1531.99 and intraday technical resistance exists at USD1539.39.
The U.S. dollar strength added to gold’s bearishness as nervous investors moved into the safe haven of the dollar instead of metals.
Light Christmas and New Years holiday volume added to the volatility as traders relaxed in preparation for 2012
The Institute for Supply Management business barometer decreased to 62.5 this month from 62.6 in November. Analysts expected a drop to 61 therefore the reading provided a dollar bullish surprise.
On a dollar bearish note, A U.S. unemployment benefit filing report increased to 381,000 last week. This came in higher than economists projected, laying a negative aura on the optimism.
The much anticipated Italian long term bond auction disappointed investors with yields posting at just under 7% triggering increased demand for the U.S. 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.
The dollar climbed to a 15-month high against the euro, while the dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was off by 0.01% to trade at 80.81 in mid U.S. trade.
Gold prices have fallen for the past six trading sessions, the longest losing streak since October 2009. Prices have plunged nearly 20% since hitting a record high of USD1920 in early September. Despite the slump, prices are still 10% higher on the year, on track for its 11th consecutive annual gain.
Elsewhere on the Comex, silver for March delivery rebounded 0.68% to trade at USD27.41a troy ounce, while copper for March delivery bounced higher by 0.28% to trade at USD3.37 a pound.
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