Forexpros – Gold futures traded in a tight range on Wednesday, swinging between modest gains and losses as investors continued to monitor developments surrounding the ongoing debt crisis in the euro zone.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,714.85 a troy ounce during early European morning trade, easing down 0.12%.
The February contract traded between a range of USD1,709.55 a troy ounce, the daily low and USD1,730.35, the daily high.
Euro zone finance ministers announced late Tuesday that they had agreed on terms for options to expand the European Financial Stability Facility, the region’s bailout fund.
However, markets were disappointed after they said its capacity to assist indebted nations would not be as large as initially hoped.
Also Tuesday, European Central Bank governing council member Christian Noyer said the situation in the euro zone has significantly worsened, threatening global financial markets.
The euro traded close to a seven-week low against the U.S. dollar, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.4% to trade at 79.47.
For much of the last year, investors’ typical reaction to downbeat news from Europe was to buy gold, as it boosts the safe haven appeal of the precious metal, but that relationship has unraveled recently.
In recent sessions, gold has tended to move in line with stocks and other commodities, losing some of its appeal as a safe haven asset as investors prefer to turn to the relative safety of the U.S. dollar.
German financial service provider Commerzbank said in a report Tuesday that, “In the short-term, we fear gold could go a bit lower, but this would be exclusively driven by weaker equity markets and weaker commodity markets, because of the increasing risk aversion.”
The lender added that in the long-term, “gold is very well supported around its current levels and even more buyers should find gold attractive at these prices.”
Elsewhere on the Comex, silver for March delivery slumped 0.7% to trade at USD31.73 a troy ounce, while copper for March delivery tumbled 1.7% to trade at USD3.333 a pound.
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