Forexpros – bsp;- Gold futures added to gains Thursday, hitting a 4 week high, as the euro moved higher against the U.S. dollar on positive economic news from the euro zone.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1648.15 a troy ounce during mid U.S. trade gaining 0.52%.
It earlier hit a high of USD1662.85, the highest since December 13th.
Gold futures were likely to find support at USD1631.05 a troy ounce and technical resistance exists at USD1681.55, the high of December 13th.
Weakness in the U.S. dollar usually works 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 0.65% to trade at 81.05.
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.
For much of the last year, investor’s typical reaction to bad news from Europe was to buy gold, as its boosts 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 assets over the past months, with investors preferring the relative safety of the U.S. dollar.
The single currency found support at ECB President Draghi stated that he sees tentative signs of stabilization of activity at low levels but warned that the economy still faces substantial downside risks at a post policy meeting press conference.
Both the ECB and the Bank of England made no changes to their interest rate policies with the ECB holding steady at 1% and the BOE maintaining its 0.5% rate.
A Spanish note auction selling twice the maximum targeted amount and an Italian auction hitting estimates added to the gold bullishness and dollar weakness
Silver bulls got a boost, yesterday, when the U.S. mint revealed that it sold 3.96 million ounces of American Eagle Silver coins thus far in January. This is more than the combined sales of the previous two months
Elsewhere on the Comex, silver for March settlement climbed 0.88% to trade at USD30.15 a troy ounce, while copper for March delivery surged by 2.91% to trade at USD3.65 a pound.
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