Forexpros – Gold prices dipped Wednesday as investors took a breather from buying the metal and briefly returned to dollar, as a risk-on trade fueled by strong economic data out of the U.S. appeared to wane in early Asian trading.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,599.45 a troy ounce early in Asian trade, down 0.06%.
Gold futures were likely to test support at USD1,572.65 a troy ounce, Tuesday’s low, and resistance at USD1,609.65, an earlier Wednesday high.
In the U.S., the Institute of Supply Management’s Manufacturing Purchasing Managers Index came in much stronger than expected, rising to 53.9 in December from 52.7 in November and well above market forecasts for a 53.2 reading.
Similar manufacturing indicators came out of China as well, outpacing expectations and fueling further optimism that the global economy is experiencing more robust recovery.
Furthermore, market talk resurfaced that the U.S. Federal Reserve may consider fresh rounds of extraordinary loose monetary policies like quantitative easing, which added to the dollar selloff and rush to the yellow metal.
Iran’s warnings to the United States not to send an aircraft carrier close to its shores sparked fears Tehran is not finished with its threats to close off the Strait of Hormuz waterway to conduct military exercises, which would crimp global oil supply.
Such saber-rattling took oil prices sky high, which weakened the dollar.
A weaker dollar tends to make gold more attractive.
Investors, however, began to stock back up on dollar positions and await U.S. unemployment data on Friday.
Elsewhere on the Comex, silver for March delivery dipped 0.66% to trade at USD29.36 a troy ounce, while copper for March delivery traded lower by 0.67% to trade at USD3.50 a pound.
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