Forexpros – Gold futures hit a seven week low on Tuesday as U.S. dollar strength slowed demand for the precious metal as a safe haven investment.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1656.45 a troy ounce during late U.S. trade falling 0.64%. It earlier hit a high of USD1681.55.
Gold futures were likely to find support at USD1653.79 and technical resistance exists at USD1665.19.15.
The surging U.S. dollar combined with declining Indian gold imports worked together to depress gold prices.
The euro hit 11 month lows against the greenback on worries that the latest bailout fund lacks sufficient capital to save struggling economies in the euro zone.
Meanwhile, The Bombay Bullion Association reported that Indian imports of the precious metal may plunge by as much as 16% as the rupee drops to all time lows.
Frank McGhee of Integrated Brokerage Services told Bloomberg, “The dollar’s strength is working against gold. We will continue to see liquidation because of the uncertainty surrounding Europe.”
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 gave back 0.84% to trade at USD30.78 a troy ounce, while copper for March delivery plunged 1.44% to trade at USD3.41 a pound.
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