Forexpros – Profit taking sent gold prices falling in early Asian trading on Wednesday, erasing the strong gains the metal posted ahead of the European Central Bank’s long-term refinancing operation that starts in Europe later Wednesday.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,786.75 a troy ounce, down 0.09%.
Gold futures were likely to test support at USD1,767.25 a troy ounce Tuesday’s low, and resistance at USD1,791.65, Tuesday’s high.
The ECB’s second long-term refinancing operations makes three-year loans available to banks at attractive interest rates and collateral requirements.
The program aims to increase the value of assets like government debt in participating countries, which is bullish for gold in that the refinancing increases liquidity and lays the seeds for inflationary pressure down the road.
Market sentiment estimated the ECB making EUR500 billion available to banks through the low-cost loans.
The ECBs’ move sent the euro rising in anticipation of increased demand for European government debt and the dollar falling, which was also bullish for gold since the greenback and the yellow metal often trade inversely of one another.
However, the metal rose to the point that profit-taking kicked and the metal hovered in range early in the session.
Elsewhere on the Comex, silver for May delivery was down 0.56% and trading at USD36.995 a troy ounce, while copper for May delivery was down 0.34% and trading at USD3.902 a pound.
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