Forexpros – Gold futures were up for a second day on Tuesday, trading at the highest level since mid-December as weakness in the U.S. dollar and concerns over a possible Greek debt default boosted the appeal of the yellow metal.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,661.15 a troy ounce during U.S. morning trade, surging 1.85%.
It earlier rose by as much as 2.05% to trade at USD1,667.95 a troy ounce, the highest since December 13.
Gold futures were likely to find support at USD1,631.95 a troy ounce, the previous session’s low and resistance at USD1,681.55, the high of December 13.
Gold’s gains came as the U.S. dollar weakened against its major counterparts. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, retreated 0.3% to trade at 81.41.
Meanwhile, the threat of a default by Greece continued, as talks aimed at negotiating a restructuring of the country’s debts remained deadlocked, amid disagreements over a bond swap with private creditors.
Without the swap, debt-stricken Greece is unlikely to secure a second financial bailout, raising fears over a possible disorderly Greek default in March, when massive bond payments are due.
Gold, which has been trading more like a risk asset since late last year, seems to have broken that relationship, moving more like a safe haven asset in recent sessions.
Prices have gained nearly 6% since the start of 2012, boosted by the return of safe haven bids as the euro zone debt crisis entered its third year.
Wall Street investment bank Morgan Stanley said in a report Monday that it remained bullish on gold. The bank forecast gold prices to average USD1,845 an ounce in 2012, as strong investment demand, central-bank purchases and less hedging by producers drive prices higher.
The bullish outlook comes after Goldman Sachs said gold “provided the best value opportunity relative to our view of fundamentals in 2012,” forecasting prices to rise to a record-high USD1,940 an ounce.
Gold prices were boosted during the Asian trading session after government data showed that China’s economy expanded at an annualized rate of 8.9% in the fourth quarter, slowing from the previous quarter’s 9.1% rate, but slightly better than expectations for an 8.8% increase.
While the data was better-than-expected, the nation’s economy grew at the slowest pace in more than two years and expanded less than 9% for the first time since mid-2009, fuelling speculation that Beijing was likely to ease monetary policy to stimulate growth.
Elsewhere on the Comex, silver for March delivery surged 2.85% to trade at USD30.36 a troy ounce, while copper for March delivery rose 1.9% to trade at USD3.707 a pound.
Forexpros
