Forexpros – Gold prices slid in Asian trading Tuesday as ongoing uncertainty over the fate of both Greece and the euro sent investors running to the dollar, selling off gold positions in the process.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,724.05 a troy ounce, down 0.05%.
Gold futures were likely to test support at USD1,714.55 a troy ounce, Monday’s low, and resistance at USD1,765.85, Friday’s high.
Greece is working out restructuring terms with its private creditors on one front, a requirement for tapping aid down the road, while on another front, the country is mustering support for austerity measures needed for a massive aid package arranged by the E.U., the International Monetary Fund and the European Central Bank.
Patience wore thin on both fronts Tuesday, which sparked demand for gold’s traditional hedge, the dollar, as a safety play early during the session.
Furthermore, better-than-expected gains in the U.S. labor market continued to fuel expectations that the Federal Reserve was now less likely to inject liquidity into the economy via quantitative easing, a monetary policy designed to avoid deflation and encourage investment, although the dollar often weakens as a side effect.
Expectations for quantitative easing often pump up gold prices.
“The dollar’s up because of worries over Greece and optimism surrounding the U.S. economy after the jobs report,” said Jason Schenker, president of Prestige Economics LLC, according to Reuters.
Risks to the U.S. economy, however, still remain.
“In the long run, there are still a lot of downside risks to the dollar,” Schenker added.
In January, the U.S. economy picked up a net 243,000 nonfarm payrolls, much higher than an expected gain of about 150,000 jobs.
Elsewhere on the Comex, silver for March delivery was down 0.09% and trading at USD33.718 a troy ounce, while copper for March delivery was up 0.20% and trading at USD3.873 a pound.
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