Forexpros – Gold futures advanced Wednesday despite the World Bank cutting global economic growth forecasts.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1659.85 a troy ounce during mid U.S. trade advancing 0.26%.
It earlier hit a high of USD1662.75 a troy ounce and a daily low of USD1643.15 a troy ounce.
Gold futures were likely to find support at USD1631.95 a troy ounce, the low of January 16th and technical resistance exists at USD1667.95 a troy ounce, Tuesday’s high.
Weakness in the U.S. dollar worked to lift precious metal prices. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gave back 0.69% to trade at 80.79.
Interestingly, gold’s correlation with the euro/dollar exchange rate is at its most positive in nearly 2 years. This means that gold is more likely to move in synch with the euro than at any other time since January 2010.
The World Bank slashed its global growth forecast by the most in 36 months, explaining that it forecasts the world economy to grow at 2.5% in 2012, down from a June estimate of 3.6%.
The Bank added that the euro zone may contract 0.3% and cut its projection for U.S. growth to 2.2% from 2.9%.
In addition, the German government trimmed its 2012 forecast to 0.7% from a previous 1%.
The IMF aims to bolster its lending resources after identifying a potential need for USD1trillion in financing for future years. However, the fund will not comment further until its members are consulted.
In Greek debt news, word of a soon to close deal with the nation’s private creditors that would provide the creditors cash and securities with a market value of approximately 32 cents per euro of government debt, increased the positive sentiment of the day.
In addition, rating agency Fitch warned that Italy could face a two notch downgrade. The rating firm stated last week that there was a significant chance that the nation will have its credit rating cut by the end of January.
Meanwhile, Credit Suisse lowered its average gold price forecast for 2012 to USD1755 per ounce from USD1850, while maintaining its bullish view.
Elsewhere on the Comex, silver for March settlement advanced 1.02% to trade at USD30.44 a troy ounce, while March copper futures climbed 0.71% to trade at USD3.76 a pound.
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