Forexpros – Gold prices fell Wednesday as investors avoided the precious metal and focused more on U.S. asset classes, which were buoyed by stronger-than-expected consumer confidence numbers.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,589.15 a troy ounce early in Asian trade, down 0.40%.
Gold futures were likely to test support at USD1,587.75 a troy ounce, Wednesday’s low, and resistance at USD1,615.55, Friday’s high.
On Tuesday in the U.S., the Confidence Board reported that its widely followed consumer confidence index came to 64.5 in December, up from 55.2 in November and outpacing market forecasts for a 58.2 reading.
However, the S&P/Case-Shiller House Price Index showed home prices in a 20-city composite group fell 3.4% in October from the same month in 2010, which helped dampen spirits on Wall Street.
Meanwhile investors were jumping to the sidelines to pay close attention to an Italian government bond auction.
Fears are growing that the auction will reveal eroding investor confidence in the country.
Ten-year bond yields in Italy recently hit 7.04%, up above the 7% level that prompt Greece, Ireland and Portugal to seek bailouts.
Furthermore, the new year is approaching with dark clouds already forming on the horizon, as ratings agencies have said they may downgrade sovereign debt next year, even in healthier countries like France.
A cocktail of improving economic indicators in the U.S. mixed with uncertainty in Europe has made the dollar a safe haven asset class again, replacing gold, which welcomed investors seeking refuge from volatile currency markets earlier in 2011.
Today, gold often moves in line with the euro and stock markets.
Elsewhere on the Comex, silver futures for March delivery were down 0.10% and trading at USD28.712 a troy ounce, while copper futures for March were up 0.50% at USD3.429 a pound.
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