Forexpros – Gold futures traded lower during the U.S. afternoon session, as profit takers took advantage of the sharp gains from Monday, triggered by dovish remarks from Federal Reserve Chairman Ben Bernanke.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,686.85 a troy ounce during U.S. afternoon trade, down 0.07%.
It earlier rose by as much as 0.62% to trade at USD1,699.55 a troy ounce, the highest since March 13.
Gold futures were likely to find support at USD1,657.65 a troy ounce, Monday’s low and short-term resistance at USD1,706.15, the high from March 13.
Gold prices surged 1.6% on Monday, the largest one-day gain since late January after Fed chief Bernanke said that “continued accommodative policies” are needed to bring about big gains in the U.S. jobs market, which he described as “far from normal,” despite a recent improvement.
Markets interpreted the comments as an indication the central bank will maintain its ultra-loose monetary policy and reinforced the view that further easing from the central bank may be possible.
Quantitative easing has been a key driver in gold’s bull run over the past year, as it keeps interest rates and borrowing costs low, which makes gold more attractive compared with yield- or dividend-bearing assets such as bonds or stocks.
Prices have been under pressure in recent weeks, dropping nearly 6% since late February as investors dumped long positions after the Fed gave an upbeat assessment of the U.S. economy earlier in the month, which reduced expectations for a third round of U.S. monetary easing.
Despite the recent slump, knowledgeable market analysts expect prices to climb higher in the near-term.
AngloGold Ashanti Chief Executive Mark Cutifani said earlier the price of gold could exceed USD2,000 a troy ounce later in 2012 as demand remains robust in fast-growing economies like India and China.
Meanwhile, Wall Street investment bank Morgan Stanley expects gold prices to average USD1,825 per ounce in 2012, approximately 7.5% higher than the current price.
The bullish case is built on negative real interest rates and the prospect of further unconventional monetary policy in the U.S. and Europe.
Australian lender Macquarie also weighed in with an upbeat forecast, saying the recent pullback represents a major buying opportunity, and that prices were likely to hit USD2,250 per ounce in 2012.
The bank added that that recent weakness in the metal is not surprising giving the tendency for the gold market to eke out seasonal lows in March.
Elsewhere on the Comex, silver for May delivery fell 0.16% to trade at USD32.70 a troy ounce, while copper for May delivery gave back 0.24% to trade at USD3.89 a pound.
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