Forexpros – Gold futures edged higher on Wednesday, after dropping nearly 1% in the previous session as a broadly weaker U.S. dollar boosted the appeal of the precious metal, but gains were limited amid muted physical demand in India.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,657.35 a troy ounce during early European morning trade, gaining 0.63%.
It earlier rose by as much as 0.72% to trade at a daily high of USD1,658.45 a troy ounce.
Gold futures were likely to find support at USD1,634.75 a troy ounce, the low from March 14 and short-term resistance at USD1,669.85, March 19’s high.
Gold prices took cues from the currency market on Wednesday, tracking movements in the euro. Gold remains more sensitive to moves in the euro/dollar exchange rate in the short term than to rising risk aversion, which in the past has been a positive driver of prices.
The single currency pushed higher against the U.S. dollar, trading close to a two-week high as the euro found some support after the March 20 deadline for Greece to avoid a default passed.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.3% to trade at 79.63, the lowest since March 9.
Dollar weakness usually benefits gold, as it boosts the metal’s appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
But gains were limited amid weak demand on the physical market. Indian jewelers have extended the first nationwide strike in seven years for two additional days, asking that the government cancel a new duty on gold jewelry.
“This ‘strike,’ which the industry association claims has been joined by more than 90% of the country’s 300,000 gold jewelers, has now been ongoing for four days and looks set to continue,” said analysts at Commerzbank.
India’s customs duty on gold rose 4%, Finance Minister Pranab Mukherjee announced last Friday, in a move aimed at helping the government to keep its current-account deficit under control.
India is the world’s top gold consumer.
Gold traders were awaiting a speech from Fed Chief Ben Bernanke later in the day at an event in Washington; his comments would be closely watched.
Elsewhere on the Comex, silver for May delivery jumped 1.4% to trade at USD32.28 a troy ounce, while copper for May delivery rose 0.67% to trade at USD3.856 a pound.
According to a survey by the Silver Institute, an industry group, 77% of U.S. jewelers reported a year-over-year increase in silver jewelry sales in 2011.
The Silver Institute’s annual Silver Jewelry Sales Survey published Tuesday also found that 27% of survey respondents saw silver jewelry sales rise by more than 25% in 2011 from the previous year.
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