Forexpros – Gold futures remained little changed on Tuesday, as traders remained cautious amid growing expectations for action by the European Central Bank to ease the debt crisis in the euro zone.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,612.75 a troy ounce during U.S. morning trade, dipping 0.02%.
Gold futures were likely to test support at USD1,601.80 a troy ounce, Monday’s low and resistance at USD1,627.50, the high of July 31.
Market sentiment was boosted by growing expectations that the ECB will soon take steps to help lower Spanish and Italian borrowing costs after ECB head Mario Draghi indicated last week that the bank may restart its bond buying program.
Investors remained wary after Draghi said that any steps by the bank were conditional on euro zone governments experiencing difficulty on bond markets activating the bloc’s bailout funds to purchase government bonds and accepting strict conditions and supervision.
Gold bulls remained hopeful after U.S. data last week showing an unexpected increase in the U.S. unemployment rate last month kept alive expectations for another round of quantitative easing from the Federal Reserve.
The U.S. economy added 163,000 jobs in July, the biggest increase since February and outstripping expectations for an increase of 100,000, but the unemployment rate unexpectedly ticked up to 8.3%, from 8.2% in June.
Gold and the dollar trade inversely, and talk the Fed is considering easing can weaken the greenback and send the yellow metal higher.
Meanwhile, physical demand from India, the world’s largest gold consumer, looked likely to remain sluggish ahead of the festival season which begins this month and runs through until November, as a result of a weak rainy season.
Rainfall in India as a whole is 20% below the 50-year average and, with the monsoon season half over, India is facing the possibility of a full-blown drought in some regions.
Elsewhere on the Comex, silver for September delivery was up 0.54% to trade at USD28.051 a troy ounce, while copper for September delivery rallied 1.50% to USD3.440 a pound.
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