Forexpros – Gold futures extended sharp gains on Thursday, climbing to a fresh four-week high as the euro rose against the U.S. dollar following positive comments from European Central Bank President Mario Draghi.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,661.05 a troy ounce during early European morning trade, rallying 1.28%.
It earlier rose by as much as 1.35% to trade at USD1,662.85 a troy ounce, the highest since December 13.
Gold futures were likely to find support at USD1,631.05 a troy ounce, the previous day’s low and resistance at USD1,681.55, the high of December 13.
Gold’s gains came as the euro recovered from a 16-month low against the greenback, while the dollar index declined 0.65% to trade at 81.04.
Gold’s correlation with the euro/dollar exchange rate is at its most positive in nearly two years, meaning gold prices are more likely to move in synch with the euro than at any other time since January 2010.
Sentiment on the single currency improved after ECB President Mario Draghi said that there are “tentative” signs that the economy in the euro zone is stabilizing.
Draghi added that the central bank’s recent refinancing operation has made a substantial contribution to improving the funding situation for banks in the euro zone and averting a liquidity crunch.
The comments came after the ECB left the benchmark interest rate unchanged at 1.0%.
Also Thursday, Spain sold twice the maximum targeted amount of EUR5 billion at auction at lower yields than in similar offerings in December. An auction of Italian short-term government debt also met with solid investor demand at sharply lower yields.
Gold prices were boosted during the Asian session as strong physical demand in Asia and the U.S. supported prices.
Gold demand in China, the world’s second largest consumer, continued to pick up ahead of the Lunar New Year, which falls on January 23. On Wednesday, official data showed that China’s gold imports from Hong Kong surged to a record high 102,779 kilograms in November.
Meanwhile, the U.S. Mint said Wednesday that it sold 79,000 ounces of gold coins so far in the first ten days of January, topping the total sales in December of 65,500 ounces.
Elsewhere on the Comex, silver for March delivery surged 1.85% to trade at USD30.44 a troy ounce, while copper for March delivery rallied 2.75% to trade at USD3.643 a pound.
Physical demand for the silver metal has also been robust. The U.S. Mint said Wednesday that it sold 3.96 million ounces of American Eagle silver coins so far in January, more than the combined sales in the previous two months.
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