Forexpros – Gold futures held steady in range bound trade on Tuesday, as market participants awaited a Spanish government debt auction later in the day amid concerns the country will be the next euro zone member to seek an international bailout.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,649.65 a troy ounce during early European trade, easing up 0.01%.
The June contract traded in a tight range between USD1,646.25, the daily low and a session high of USD1,654.15 a troy ounce.
Gold futures were likely to find support at USD1,613.55 a troy ounce, the low from April 4 and resistance at USD1,685.25, the high from April 2.
Spain was due to auction up to EUR3 billion of 12 and 18-month government bonds later Tuesday, as concerns mounted that the government will not be able to meet deficit reduction targets in the face of a looming recession.
Sentiment was hit on Monday after the cost of insuring Spanish sovereign debt against default rose to a record, pushing the yield on the country’s 10-year bonds above 6% for the first time since early December.
Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves.
Meanwhile, Japan’s Finance Minister said earlier that his country will provide USD60 billion to the International Monetary Fund’s effort to expand its resources and shield the global economy against any deepening of Europe’s debt crisis.
There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears Spain will be the next in the euro zone to require a bailout.
Although gold’s appeal as a safe haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal in recent months.
A weakening euro and stronger dollar have weighed on gold instead.
Despite failing to attract safe haven bids in recent sessions, London-based industry research group GFMS said in a report late last week that it expects gold prices to hit USD2,000 “before the year is out”, citing Spain’s debt woes.
Elsewhere on the Comex, silver for May delivery rose 0.3% to trade at USD31.45 a troy ounce, while copper for May delivery shed 0.65% to trade at USD3.604 a pound.
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