Forexpros –
Forexpros – Gold futures traded higher during U.S. afternoon trade Tuesday, coming off the session highs following the positive U.S. ISM report.
Sentiment on the precious metal remained upbeat as ongoing expectations for global monetary stimulus supported prices ahead of several monetary policy meetings later this week.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,619.15 a troy ounce during U.S. trade, gaining 0.33%.
It earlier rose by as much as 0.4% to trade at a session high of USD1,624.85 a troy ounce. Prices touched USD1,631.25 on Friday, the highest since May 8.
Gold futures were likely to find support at USD1,532.55 a troy ounce, the low from May 30 and near-term resistance at USD1,639.05, the high from May 8.
Gold came off the highest levels of the day after the U.S. Institute of Supply Management said its non-manufacturing purchasing manager’s index inched up by 0.2 points to 53.7 in May from a reading of 53.5 in April.
But the precious metal remained supported after finance ministers from the Group of Seven industrialized nations held a teleconference call earlier to discuss the euro zone’s escalating debt crisis, however no major agreements or plans were formed.
Japan’s Finance Minister Jun Azumi, who had participated in the discussion, said in a press conference following the call that the G-7 would not issue a joint statement.
However, Azumi said that G7 members agreed to work together to deal with problems in Spain and added that officials did not discuss the possibility of a Greek exit from the euro.
Traders now shift their attention to several monetary policy meetings later this week, including the European Central Bank on Wednesday and Bank of England on Thursday, for clues on their responses to weakening global growth.
There is some speculation by market analysts that the ECB could announce liquidity injections in to Europe’s troubled financial system. Other analysts expect the central bank to renew its suspended government bond-buying program.
In addition, Federal Reserve Chairman Ben Bernanke will testify on Thursday before a congressional committee about the state of the U.S. economy. Gold traders will be looking for clues as to the likelihood of a fresh round of monetary easing, which could potentially hurt the U.S. dollar and support gold.
Gold can benefit from such an environment of easy money because of expectations that ample liquidity would put a damper on the value of paper currencies.
Gold futures advanced even as the U.S. dollar gained against the euro, in a sign the precious metal’s safe haven appeal may finally be re-emerging.
The euro weakened after Spain’s treasury minister said that financial markets were effectively closed to Spain, while weak euro zone data underlined concerns over the ongoing deterioration in the region’s economy.
Gold is often considered a safe haven during times of financial turmoil, but the precious metal has risen and fallen in line with riskier assets in recent months.
Gold gained as much as 15% earlier this year to hit USD1,790 an ounce after the Fed said in January it would keep interest rates near zero until at least late 2014 and indicated that it could introduce a fresh round of asset-purchases.
However, prices have lost almost 9% since late February, amid growing concerns the European debt crisis has been escalating, which has fueled demand for the yellow metal’s hedge, the greenback.
Elsewhere on the Comex, silver for July delivery soared 1.69% to trade at USD28.49 a troy ounce, while copper for July delivery traded down 0.32% to USD3.296 a pound.
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