Forexpros – Gold futures swung between modest gains and losses on Tuesday, remaining above the psychologically important USD1,700-an-ounce-level as market sentiment continued to be dominated by developments surrounding the euro zone’s debt crisis.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,718.75 a troy ounce during U.S. morning trade, edging 0.25% higher.
The February contract traded between a range of USD1,707.35 a troy ounce, the daily low and USD1,721.65, the daily high.
Earlier in the day, Italy’s Treasury auctioned a total of EUR7.5 billion of government debt, close to its maximum target level of EUR8 billion.
High demand at the auction, which was viewed as a key test of investor confidence in the country’s debt, helped ease concerns over Italy’s debt woes despite seeing borrowing costs surge to euro-lifetime highs.
Also Tuesday, finance ministers from the 17 European Union member states were to meet in Brussels to discuss the region’s financial crisis and ways to boost the firepower of the European Financial Stability Facility.
The ministers were also expected to sign off on Greece’s next tranche of financial aid.
The U.S. dollar was broadly lower against most of its major counterparts, with the dollar index falling 0.4% to trade at 79.08. Gold prices often move inversely to the U.S. dollar, as gold becomes less expensive for buyers using other currencies.
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.
In recent sessions, gold has tended to move in line with stocks and other commodities, losing some of its appeal as a safe haven asset as investors prefer to turn to the relative safety of the U.S. dollar.
German financial service provider Commerzbank said in a report earlier that, “In the short term, we fear gold could go a bit lower, but this would be exclusively driven by weaker equity markets and weaker commodity markets, because of the increasing risk aversion.”
Elsewhere on the Comex, silver for March delivery shed 0.23% to trade at USD32.16 a troy ounce, while copper for March delivery rose 0.74% to trade at USD3.396 a pound.
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