Forexpros – Gold futures edged lower on Wednesday, but remained close to a six-week high as market sentiment continued to be dominated by developments surrounding Italy’s debt woes.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,785.35 a troy ounce during early European morning trade, shedding 0.17%.
It earlier fell by as much as 0.25% to trade at a daily low of USD1,783.55 a troy ounce.
Late Tuesday, Italian Prime Minister Silvio Berlusconi announced that he would resign after parliament approves next year’s budget. The announcement came after Berlusconi lost his parliamentary majority during a vote on a budget bill.
Investors have been focusing on Italy in recent sessions, after the country’s borrowing costs approached the 7% mark that prompted peripheral euro zone nations, Greece, Portugal and Ireland to seek bailouts.
Meanwhile, in Greece, outgoing Prime Minister George Papandreou was widely expected to name former European Central Bank Vice President Lucas Papademos as prime minister of an interim government later in the day.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.25% to trade at 76.98. Gold prices often move inversely to the U.S. dollar, as gold becomes more expensive for buyers using other currencies.
Elsewhere, official data released earlier showed that China’s consumer price index eased for the third consecutive month in October, slowing to 5.5% from 6.1% in September.
However, rising gold consumption in China indicated that inflation remains a concern. The head of the China Gold Association said earlier that Chinese consumption of the precious metal was projected to total 400 tons in 2011, up significantly from 270 tons last year.
Chinese gold production was forecast to exceed 350 tons in 2011. Production through the first nine months of the year totaled 259 tons, up 4.3% from a year ago. China is the world’s second largest gold consumer, following India.
Investors often buy gold as a refuge against economic and political uncertainty and as a hedge against inflation.
Elsewhere on the Comex, silver for December delivery slumped 0.68% lower to trade at USD34.91 a troy ounce, while copper for December delivery edged 0.13% higher to trade at USD3.537 a pound.
Forexpros
