Forexpros – Gold futures held steady in rangebound trade during European morning hours on Wednesday, as investors remained sidelined amid mounting concerns over Spain’s fiscal health and ahead of weekend elections in Greece.
Investors eyed an Italian government bond auction later in the day, amid growing fears the country will be the next euro zone member to require a bailout.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,614.65 a troy ounce during early European trade, easing up 0.05%.
The August contract traded in between a tight range of USD1,607.05, the daily low and a session high of USD1,615.45 a troy ounce. Prices touched a one-month high of USD1,642.15 on June 6.
Gold futures were likely to find support at USD1,559.35 a troy ounce, the low from June 8 and resistance at USD1,642.15, the high from June 6.
Gold futures rallied nearly 1% on Tuesday to reclaim the key USD1,600-an-ounce level as investors hung on to hopes for action by global central banks and other authorities to stimulate growth and boost the world economy.
Chicago Federal Reserve Bank President Charles Evans reiterated his support for additional monetary stimulus from the central bank on Tuesday, ahead of next week’s meeting of the Federal Open Market Committee. Evans, however is not an FOMC voting member.
However, traders were reluctant to open fresh positions amid growing concerns over rising borrowing costs in Spain and Italy, as well as jitters ahead of weekend elections in Greece, which could determine the course of the country’s future in the euro zone.
Spanish 10-year yields rose to 6.86% on Tuesday, a euro-era record high. Similar-maturity Italian yields increased to 6.22%, the highest since January.
Spain became the fourth euro zone nation to seek a rescue over the weekend, after Greece, Portugal and Ireland. Some investors fear it is only a matter of time before Italy becomes the next country to ask for help.
Investors remained cautious as Italy’s Treasury was preparing to sell up to EUR6.5 billion of 364-day bills later in the day, followed by a longer-maturity debt auction on Thursday.
Although gold’s appeal as a safe haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal in recent months.
A weakening euro and stronger dollar have weighed on gold instead, as the precious metal has been moving in tandem with riskier assets since hitting a record high of USD1,920 last September.
Gold has lost some of its safe haven appeal to the dollar, U.S. Treasuries and German Bunds, partly as a strengthening dollar makes the metal less attractive to buyers holding other currencies.
Elsewhere on the Comex, silver for July delivery shed 0.15% to trade at USD28.90 a troy ounce, while copper for July delivery added 0.6% to trade at USD3.356 a pound.
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