Forexpros – Gold futures firmed above the key USD1,600-an-ounce level during European morning hours on Tuesday, as growing expectations for further easing measures by central banks around the world supported the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,609.85 a troy ounce during early European trade, climbing 0.75%.
It earlier rose by as much as 0.85% to trade at USD1,611.65 a troy ounce, the highest since June 20.
Gold futures were likely to find support at USD1,548.45 a troy ounce, the low from June 28 and near-term resistance at USD1,622.95, the high from June 20.
The U.S. Institute for Supply Management said Monday that its index of purchasing managers fell by 3.8 point to 49.7 in June from a reading of 53.5 in May, the first contraction since July 2009.
The data fuelled speculation that the Federal Reserve may implement a third round of quantitative easing, to shore up growth in the U.S. economy, which has been hit by the ongoing crisis in the euro zone.
Gold investors will be closely watching U.S. data in the second quarter for clues as to the likelihood of a fresh round of monetary easing, which could potentially hurt the dollar and support gold.
A separate report showed that the final reading of the euro zone manufacturing purchasing managers’ index came in at 45.1 in June, the lowest level since June 2009.
Investors were looking ahead to the outcome of the European Central Bank’s monetary policy meeting on Thursday, amid growing expectations for a rate cut.
Meanwhile, in China, a government report showed that Chinese manufacturing activity grew at its slowest pace in seven months in June, as new export orders tumbled to lows hit in March 2009.
The China Securities Journal, a state-run newspaper, said the time is ripe for China to cut banks’ reserve requirements as slowing inflation gives more room for easing to stabilize growth.
Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
Trading volume in the U.S. will likely be light this week amid the Independence Day holiday on Wednesday. Markets in the U.S. will be open for a half-day Tuesday and closed Wednesday.
Elsewhere on the Comex, silver for September delivery rallied 1.4% to trade at USD27.88 a troy ounce, while copper for September delivery jumped 1.6% to trade at USD3.524 a pound.
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