Forexpros – Gold futures edged higher in thin trade on Thursday, as a broadly weaker U.S. dollar supported prices and as investors remained jittery amid fears the debt crisis in the euro zone was spreading to the region’s core economies.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,698.15 a troy ounce during early European morning trade, gaining 0.27%.
It earlier rose by as much as 0.3% to trade at a daily high of USD1,698.45 a troy ounce.
Gold’s gains came as the dollar weakened against its major counterparts, boosting the appeal of commodities. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.25% to trade at 79.10.
Meanwhile, investors continued to eye developments surrounding the debt crisis in the euro zone. On Wednesday, Germany’s Treasury failed to reach its maximum sales target of EUR6 billion, auctioning just EUR3.64 billion of 10-year government bonds, its least successful debt sale since the launch of the single currency.
Also Wednesday, ratings agency Fitch warned that France could lose its triple-A credit rating if European Union leaders fail to take action to prevent the crisis from worsening.
While the news would have normally boosted the safe haven appeal of the precious metal, investors preferred to sell profitable gold holdings to raise cash and cover losses elsewhere.
Data from the International Monetary Fund released Wednesday showed that Germany’s central bank lowered its gold reserves for the first time since December 2010 in October. The Bundesbank sold 150,000 troy ounces last month to bring its total reserves to 109.194 million ounces.
A spokesman for the bank said the gold had been sold to the Ministry of Finance to mint commemorative coins.
The IMF report showed that other central banks added to their gold holdings last month. Russia continued its program of gold accumulation, lifting its reserves by 627,000 ounces to 28.005 million ounces.
Kazakhstan also reported significant additions for the second consecutive month. Its reserves totaled 2.366 million ounces at the end of October, up from around 2.265 million ounces in September.
Elsewhere on the Comex, silver for December delivery edged 0.3% higher to trade at USD31.98 a troy ounce, while copper for December delivery dropped 1.25% to trade at USD3.292 a pound.
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