Forexpros – Gold prices rose in Asian trading on Wednesday as investors fleeing exposure from the European debt crisis snapped up nicely priced positions in the yellow metal amid safe-haven buying.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were up 0.21% and trading at USD1,579.55 a troy ounce, up from a session low of USD1,578.55 and down from a high of USD1,581.05 a troy ounce early during the session.
Gold futures were likely to test support at USD1,567.95 a troy ounce, the low from July 24, and resistance at USD1,583.65, the high from July 24.
The U.S. dollar often serves as the safe-haven of choice when the European debt crisis heats up but not always.
Gold is the traditional hedge of choice for the dollar but can play a similar role with other paper currencies as well, including the euro, which dipped to a 2-year low against the greenback and a 12-year low against the yen in recent sessions.
The yield on Spanish 10-year bonds rose earlier to a euro-era high of 7.60%, well above the 7% threshold considered unsustainable by the markets.
Eurozone policymakers recently allocated EUR100 billion for Spain to prop up its banking sector and regional governments, though investors in all asset classes remain concerned that the country is suffering from too much debt and not enough growth as a whole, and will need a lifeline itself.
Elsewhere in Europe, the Markit research group reported that its preliminary German manufacturing purchasing managers’ index dropped to 43.3 in July from a final reading of 45.0 in June.
Markets were expecting the index to increase to 45.3, and the softer-than-expected numbers pushed the euro and equities downward, considering Germany serves as Europe’s economic motor.
Markit’s manufacturing index for the eurozone as whole contracted at the fastest pace since May 2009, dropping to 44.1 in July from 45.1 in June, below a 45.3 forecast.
Fears of a near European meltdown eclipsed otherwise positive output data out of China, where the country’s HSBC manufacturing purchasing managers index jumped to 49.5 in July, its highest level since February, from a final reading of 48.2 in June.
While the dollar was up early in the Asian session, gold posted gains as well.
Elsewhere on the Comex, silver for September delivery was up 0.16% and trading at USD26.853 a troy ounce, while copper for September delivery was down 0.57% and trading at USD3.345 a pound.
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