Forexpros – Gold futures edged lower on Wednesday, easing off the previous session’s four-week high as investors were cautious amid concerns over a possible Greek debt default and ahead of a closely-watched Portuguese debt auction.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,648.55 a troy ounce during early European morning trade, shedding 0.4%.
It earlier fell by as much as 0.5% to trade at a session low USD1,644.15 a troy ounce. Prices rallied to a four-week high of USD1,667.95 on Tuesday.
Gold futures were likely to find support at USD1,631.95 a troy ounce, the low of January 16 and resistance at USD1,667.95, Tuesday’s high.
Greece’s government was due to resume talks with its bond holders to discuss a voluntary write-down on Greece’s sovereign debt, after talks broke down on Friday, amid disagreements over how much money investors will lose by swapping their bonds.
Without the swap, debt-stricken Greece is unlikely to secure a second financial bailout, raising fears over a possible disorderly Greek default in March, when massive bond payments are due.
Markets were also eyeing a government debt sale from Portugal, in what was being viewed as a critical test of investor’s appetite for the country’s debt.
Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves.
Meanwhile, prices came under pressure amid lackluster physical demand in Asia. Gold buying in China was set to ease as the Lunar New Year celebrations get underway.
“We would expect that physical interest will have trailed off significantly out of China by the latter half of next week,” UBS said in a report earlier.
Also weighing on the precious metal, India raised the import tax on gold by nearly 90% on Tuesday, which was likely to weigh on demand in the world’s largest consumer of the precious metal.
The country’s finance ministry said in a statement that gold imports will now be taxed at 2% of value compared to a flat rate of 300 rupees (USD5.83) per 10 grams previously.
Elsewhere on the Comex, silver for March delivery fell 0.8% to trade at USD29.90 a troy ounce, while copper for March delivery slumped 0.37% to trade at USD3.716 a pound.
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