Forexpros – Gold soared on Tuesday as the falling dollar lifted demand for the precious metal as an alternative investment.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1617.35 a troy ounce during mid U.S. trade surging 1.29%. It earlier hit a high of USD1596.45.
Gold futures were likely to find support at USD1613.25 and technical resistance exists at USD1619.85.
Bullish news from the euro zone on German confidence, the Spanish note auction and the International Monetary Fund being pledged EUR150 billion to help control the debt crisis, all weighed on the U.S. dollar, consequently lifting gold prices.
The euro climbed as high as 1% against the dollar today. The 30 day correlation coefficient between gold and the euro is at 0.59 according to Bloomberg data. This compares with minus 0.35 on October 7th. A figure of minus one means the two move in opposite directions, and 1 means they move exactly the same.
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 month, with investors preferring the relative safety of the U.S. dollar.
Elsewhere on the Comex, silver for March delivery gained by 2.20% to trade at USD29.51 a troy ounce, while copper for March delivery jumped higher by 1.93% to trade at USD3.37a pound.
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