Forexpros – Gold futures rallied to a four-week high on Wednesday, boosted by indications of strong physical demand as traders continued to monitor developments surrounding the euro zone’s debt crisis.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,645.95 a troy ounce during early European morning trade, gaining 0.9%.
It earlier rose by as much as 1.02% to trade at USD1,647.85 a troy ounce, the highest since December 13.
Gold futures were likely to find support at USD1,612.35 a troy ounce, the previous day’s low and resistance at USD1,681.55, the high of December 13.
Gold regained some of its safe haven appeal after prices rose above their 200-day moving average for the first time since December 15 on Tuesday. Market participants said that fresh buy orders were triggered once prices rose above the key USD1,634 an ounce level.
Prices found additional support after official data showed that China’s gold imports from Hong Kong surged to a record in November, as consumers bought the precious metal before the Lunar New Year, which falls on January 23.
Mainland China bought 102,779 kilograms from Hong Kong in November, up from 86,299 kilograms in October.
Royal Bank of Scotland said in a report earlier that demand from China “is likely to increase this month irrespective of price, in the run-up to the Chinese New Year Holiday.”
Meanwhile, markets were looking forward to a meeting between German Chancellor Angela Merkel and Italian Prime Minister Mario Monti later in the day in Berlin, while International Monetary Fund chief Christine Lagarde was to meet French President Nicolas Sarkozy in Paris.
Investors also eyed Spain and Italy’s plan to sell as much as EUR17 billion in debt on Thursday and Friday respectively. The yield on 10-year Italian government bonds remained above the 7% threshold seen as unsustainable, at 7.14%, while the yield on Spanish 10-year bonds was at 5.54%.
Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves.
Elsewhere on the Comex, silver for March delivery jumped 1.15% to trade at USD30.16 a troy ounce, while copper for March delivery rose 0.6% to trade at USD3.533 a pound.
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