Forexpros – Gold futures extended gains on Wednesday, climbing to a three-day high as markets awaited the outcome of the Federal Reserve’s policy-setting meeting later in the day and kept a close eye on developments in Greece.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,742.45 a troy ounce during U.S. morning trade, rallying 1.79%.
It earlier rose by as much as 1.99% to trade at USD1,745.65 a troy ounce, the highest price since October 28.
Gold’s gains came as the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, slumped 0.68% to trade at 76.91.
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.
The greenback’s losses came amid speculation the Fed may offer hints of further easing measures to boost the U.S. economy when it concludes its two-day policy-setting meeting later in the day.
Markets will pay close attention to the post-meeting press conference conducted by Fed Chair Ben Bernanke to gauge how close the central bank is to another round of asset purchases, or quantitative easing.
Meanwhile, Greek Prime Minister George Papandreou won the backing of his cabinet to hold a referendum on a EUR130 billion bailout package earlier and was to meet with French and German leaders to discuss the planned vote later in the day in Cannes, ahead of the Group of 20 summit scheduled to begin Thursday.
If Greece rejects the deal it would put the next tranche of aid to Athens in jeopardy, pushing the country closer to a default and increasing the risk of contagion in global financial markets.
Global financial service provider Barclays said in a report earlier that the referendum was “a risky strategy that opens the possibility that the euro area package will unravel before it even begins.”
The report added that, given recent developments in the euro zone, “it is wise to stay close to the safe havens.”
Elsewhere on the Comex, silver for December delivery soared 4.95% to trade at USD34.35 a troy ounce, while copper for December delivery rallied 3.05% to trade at USD3.609 a pound.
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