Forexpros – Gold futures moved solidly higher Monday, as a weak U.S. dollar increased the appeal of the precious metal .
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,664.45 a troy ounce during U.S. afternoon trade, gaining 0.54%.
It earlier traded at USD1,669.85 a troy ounce, the highest since March 14.
Gold futures were likely to find support at USD1,634.75 a troy ounce, the low from March 14 and short-term resistance at USD1,682.75, the high from March 14.
Gold prices followed the currency market Monday, inversely tracking movements in the U.S. dollar. Gold remains more sensitive to moves in the euro/dollar exchange rate in the short term than to rising risk aversion, which in the past has been a positive driver of prices.
The single currency turned higher against the U.S. dollar, rising above 1.32 after the first stage of a two-part auction to settle credit default swap contracts written on Greek government debt was successfully completed.
Holders of nearly USD3.2 billion in Greek CDS will likely receive around USD2.5 billion in compensation for the country’s debt restructuring.
The CDS contracts were triggered after the Greek government earlier this month activated clauses forcing all private bondholders to participate in a debt swap that cut the nominal value of Greek debt holdings by 53.5%, resulting in the declaration of a “credit event” by the International Swaps and Derivatives Association.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, fell 0.48% to trade at 79.70.
Gold prices have been under pressure in recent weeks as investors sold long positions after the Federal Reserve gave an upbeat assessment of the U.S. economy, which reduced expectations for a third round of U.S. monetary easing by the central bank.
Gold has fallen around 8% since late February and are about 14% below the all-time high of USD1,920 per ounce hit in September.
Presuring the U.S. dollar, Bank of New York Fed President William Dudley issued cautious words about U.S. economic growth.
Dudley stated, “signs that the economy is improving, do not dispel meaningful risks to growth including higher gasoline prices, fiscal cutbacks and a weak housing market.”
Gold futures were lower during the Asian trading session after India’s proposed plan to double the import duty on gold led to muted action on the physical market.
India’s customs duty on gold rose 4%, Finance Minister Pranab Mukherjee announced Friday, in a move aimed at helping the government to keep its current-account deficit under control.
India is the world’s top gold consumer. The duty hike may lead to a drop in demand for the precious metal.
Elsewhere on the Comex, silver for May delivery jumped 1.1% to trade at USD32.95 a troy ounce, while copper for May delivery rose 0.73% to trade at USD3.91 a pound.
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