Forexpros – Gold prices rose in Asian trading on Thursday, reversing earlier losses sustained on talk that Europe’s debt jitters will make gold’s traditional hedge, the dollar, the asset of choice if an upcoming Spanish bond auction disappoints.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded up 0.18% at USD1,642.55 a troy ounce.
Gold futures were likely to test support at USD1613.55 a troy ounce, the low of April 4, and resistance at USD1,699.55, the high on March 27.
Soft physical demand for gold in Asia coupled with mounting debt concerns in Spain made the dollar the asset of choice among many precious metals investors.
Earlier in the week, the Spanish government sold at auction 12-month and 18-month bills, and while yields were high at 2.623%, the country did raise over EUR3 billion, above target.
However, the much-anticipated 2-year and 10-year auction on Thursday will shed light on market confidence in Spain’s ability to tackle deficits amid a recession and steer its economy to better days.
Meanwhile, Spain’s central bank reported that the level of bad loans held by domestic banks rose to an 18-year high on February.
Fears that Spain may need a bailout are growing, and since Spain is home to a much larger economy than that of the recently bailed-out Greece, financial concerns have some afraid the entire continent may feel shockwaves.
Such sentiments sent gold falling earlier, although it snapped back in Asian trading amid bottom fishing.
Elsewhere on the Comex, silver for May delivery was up 0.40% and trading at USD31.613 a troy ounce, while copper for May delivery was up 0.39% and trading at USD3.640 a pound.
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