Forexpros – Gold futures edged higher on Wednesday, amid hopes European policymakers will boost efforts to tackle the region’s two-year-old debt crisis at a crucial summit of European Union leaders later this week.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,735.25 a troy ounce during early European morning trade, edging 0.2% higher.
It earlier rose by as much as 0.33% to trade at a two-day high of USD1,736.85 a troy ounce.
Gold futures were likely to find support at USD1,704.75 a troy ounce, the low of November 30 and resistance at USD1,767.05, the high of December 2.
European leaders are to discuss proposed changes to EU treaties which would allow for greater fiscal integration and stricter enforcement of budgetary discipline in the single currency bloc.
Separately, the Financial Times reported late Tuesday that European leaders would discuss creating an additional rescue fund to supplement the European Financial Stability Facility, in order to better defend against contagion in the region.
The news helped lift market sentiment, dampening demand for the safe haven U.S. dollar. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.28% to trade at 78.41.
For much of the last year, investors’ typical reaction to upbeat news from Europe was to sell gold, as it dampens the 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-sensitive assets over the past month.
Meanwhile, Wall Street investment bank Morgan Stanley expects gold to remain supported ahead of the European Central Bank’s policy meeting on Thursday, saying an anticipated interest rate cut could “boost liquidity and hence demand for the yellow metal”.
The ECB is expected to cut its benchmark interest rate for the second consecutive month, a move that would take it back to a record low of 1.0%.
Elsewhere on the Comex, silver for March delivery eased down 0.05% to trade at USD32.73 a troy ounce, while copper for March delivery rose 0.8% to trade at USD3.605 a pound.
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