Forexpros – Gold futures held steady in rangebound trade during European morning hours on Thursday, pausing following the previous day’s strong rally as investors stuck to the sidelines amid Spain’s ongoing debt woes and ahead of the release of key U.S. data later in the day.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,564.45 a troy ounce during early European trade, dipping 0.08%.
The August contract traded in between a tight range of USD1,565.85 a troy ounce, the daily high and a session low of USD1,560.75.
Gold futures were likely to find near-term support at USD1,532.55 a troy ounce, the previous day’s low and resistance at USD1,585.65, the high from May 28.
Gold futures rose 1% on Wednesday, bucking the downtrend across most of the commodity markets, as traders noted strong technical buying interest after prices failed to break below resistance near USD1,530 an ounce.
It was the third time in the past ten session that the market failed to break below the USD1,530-level, prompting bargain hunters reluctant to bet that prices will fall further to enter the market.
Gold’s gains came even as the euro tumbled below the 1.2400-level on Wednesday, setting a fresh two-year low against the greenback. The dollar index, meanwhile settled at the highest since September 2010.
The single currency came under pressure amid concerns over the situation in Spain, where rising bond yields, the growing costs of bank rescues and a recession hit economy fuelled fears that Madrid will be forced to seek an international bailout.
The yield on Spanish 10-year bonds climbed to 6.7% on Wednesday, approaching the critical 7% threshold that preceded bailouts in Greece, Ireland and Portugal. Similar-maturity Italian yields increased to 5.98%.
Elsewhere, concerns over the outcome of Greek elections mounted after an opinion poll showed anti-austerity party Syriza in the lead ahead of the June 17 vote, fuelling concerns that the country will reject the terms of its bailout agreement and be forced out of the euro area.
Gold’s gains could also be a sign of renewed safe-haven demand. Gold has recently lost its safe haven appeal to the U.S. dollar, U.S. Treasuries and German Bunds.
Global equities and commodity markets have been rattled in recent weeks as fears over the possibility of a Greek exit from the euro zone and growing concerns Spain will be the next euro zone member to require a bailout dominated market sentiment.
For the month, gold is trading down 6%, its fourth straight monthly decline, the longest stretch since January 2000.
Meanwhile, gold traders were looking forward to the release of first quarter U.S. gross domestic product figures, to gauge the strength of the U.S. economy.
Attention is also shifting towards U.S. employment data due Friday. The non-farm payrolls report is expected to show the world’s largest economy added 150,000 new jobs in May.
Gold investors will be closely watching U.S. data in the second quarter for clues as to the likelihood of a fresh round of monetary easing by the Federal Reserve, which could potentially hurt the dollar and support gold.
Elsewhere on the Comex, silver for July delivery fell 0.35% to trade at USD27.88 a troy ounce, while copper for July delivery dipped 0.1% to trade at USD3.387 a pound.
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