Forexpros –
Forexpros – Gold futures advanced Thursday on weaker than expected euro zone data and buying after Wednesday’s sharp sell off.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,720.15 a troy ounce during U.S. afternoon trade, climbing 0.59%.
It earlier rose by as much as 0.85% to trade at a session high USD1,726.35 a troy ounce.
Futures were likely to find support at USD1,689.95 a troy ounce, Wednesday’s low and a five-week low and resistance at USD1,792.15, Wednesday’s high and the highest since November.
Gold traders continued to rebalance their portfolios after prices plunged by 5% on Wednesday, or nearly USD80 per ounce, its largest one-day loss since December 2008.
In testimony before Congress on Wednesday, Fed chair Bernanke said that while keeping monetary stimulus is warranted, rising gasoline prices are likely to push up inflation temporarily and the drop in unemployment has been more rapid than expected.
But investors looking for signs of more monetary easing were disappointed as he refrained from mentioning any plans to move toward a third round of quantitative easing bond-buying, known as QE3.
The comments triggered a sharp selloff in gold and silver, as traders unwound long positions fuelled by expectations a third round of bond-buying was imminent.
The risk trade found support after the ISDA stated the restructuring of Greek government bonds would not trigger credit default swaps.
However, sentiment on risky assets remained week, as concerns regarding the viability of Wednesday’s massive liquidity injection by the European Central Bank arose.
Meanwhile, gold found support as worries over the economic outlook for the region increased after official data showed that the unemployment rate in the single currency bloc climbed to the highest level since the inception of the euro in January, while the annualized rate of inflation also increased.
Another report showed that the euro zone’s manufacturing sector contracted for the seventh consecutive month in February.
In the U.S., the Institute for Supply Management said manufacturing activity expanded at a slower rate than expected in February.
The ISM index of purchasing managers’ fell to 52.4 last month, from a reading of 54.1 in January, disappointing expectations for an increase to 54.6.
Government data showed that U.S. initial jobless claims declined modestly last week, holding steady near the lowest level since March 2008.
The U.S. Department of Labor said that initial claims for state unemployment benefits fell 2,000 to a seasonally adjusted 351,000. The previous week’s figure was revised up to 353,000 from the previously reported 351,000.
Separate reports showed that the U.S. core personal consumption expenditure index rose broadly in line with market expectations in January, while personal spending and personal income both rose less-than-expected.
Elsewhere on the Comex, silver for May delivery rocketed 1.81% to trade at USD35.27 a troy ounce, while copper for May delivery surged 1.30% to trade at USD3.93 a pound.
Silver prices plummeted nearly 7% on Wednesday, but futures are still up almost 20% since the start of 2012.
The volatile movement in silver prices added to speculation that big Wall Street banks have been suppressing the price of silver through short-selling.
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