Forexpros –
Forexpros – Gold futures rallied to eight week highs Tuesday, on renewed euro zone debt fears and weak U.S. economic data.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1738.75 a troy ounce during late U.S. gaining 0.24%.
It earlier hit a high of USD1750.55 a troy ounce and dipped to a low of USD1727.55 on the session.
Gold futures were likely to find support at USD1719.15 a troy ounce, Monday’s low and technical resistance exists at USD1760.35 a troy ounce, the high of December 8.
Strength in the U.S. dollar did little to depress precious metal prices. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gained 0.27% to trade at 79.44.
Interestingly, gold’s correlation with the euro/dollar exchange rate is at its most positive in nearly 2 years. This means that gold is more likely to move in synch with the euro than at any other time since January 2010.
Earlier, Portugal’s ten year bonds soared 199 basis points hitting a euro era record of 17.22%.
Credit default swaps also climbed to a record in the struggling nation, indicating a 71% chance the government will default, adding the safe haven appeal of the precious metal.
However, Prime Minister Pedro Passos Coehlo calmed the markets by saying the debt is “perfectly sustainable” and there is no risk of writedowns on the bonds.
European leaders meeting in Brussels reached an agreement on a fiscal discipline treaty that includes sanctions for high deficit states and demands members to create laws to limit budget shortfalls.
In addition, the leaders also decided to launch the European Stability Mechanism on July 1st, one year ahead of the original plan.
However, Britain and the Czech Republic refrained from agreeing with the treaty.
In Greek news, Prime Minister Lucas Papademos stated that he is “strongly committed” to reaching a debt deal in an attempt to calm investor’s nervousness over the extended negotiations.
Meanwhile, consumer confidence and business activity both declined in the U.S. increasing gold’s safe haven appeal.
Elsewhere on the Comex, silver for March settlement dropped 0.94% to trade at USD33.21 a troy ounce, while March copper futures gave back 0.78% to trade at USD3.78 a pound.
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