Forexpros – Gold futures firmed above the psychologically-important USD1,600-an-ounce level on Tuesday, as the U.S. dollar tumbled against most of its major counterparts after stronger-than-expected U.S. housing data and amid easing concerns over the euro zone’s debt crisis.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,615.05 a troy ounce during U.S. morning trade, jumping 1.15%.
It earlier rose by as much as 1.35% to trade at USD1,617.75 a troy ounce, the highest since December 14.
Gold futures were likely to find short-term support at USD1,585.65 a troy ounce, the previous day’s low and resistance at USD1,645.65, the high of December 14.
Gold prices added to gains after the U.S. Census Bureau said in a report that U.S. building permits rose to the highest level since March 2010 last month, while U.S. housing starts climbed to a 19-month high.
The upbeat U.S. data came after German research institute Ifo said that its Business Climate Index rose in December, confounding expectations for a decline.
Also Tuesday, Spain saw borrowing costs fall sharply at an auction of three and six-month government bonds, easing concerns over the fiscal health of the region’s fourth-largest economy.
For much of the last year, investors’ typical reaction to upbeat news from Europe was to sell gold, as it dampens the safe haven appeal of the precious metal, but that relationship has unraveled recently.
Instead, gold futures have moved largely in line with other commodities and risk-sensitive assets over the past month, with investors preferring the U.S. dollar as their safe haven of choice.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, tumbled 1.05% to trade at 80.08.
Despite the recent decline in prices, Swiss lender UBS reiterated its bullish outlook for gold in 2012, saying the fundamental factors which drove the market in 2011 remain the same.
In a report published earlier, the lender said that it expects the precious metal to average USD2,050 an ounce next year.
Elsewhere on the Comex, silver for March delivery rallied 1.8% to trade at USD29.39 a troy ounce, while copper for March delivery jumped 1.55% to trade at USD3.361 a pound.
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