Forexpros – Gold futures added to strong gains on Wednesday, rallying to a four-day high as the safe haven appeal of the precious metal re-emerged amid growing fears Greece was headed towards a messy sovereign debt default.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,737.95 a troy ounce during early U.S. morning trade, surging 1.17%.
It earlier rose by as much as 1.3% to trade at USD1,739.15 a troy ounce, the highest since February 9.
Futures were likely to find support at USD1,713.95 a troy ounce, Tuesday’s low and resistance at USD1,754.95, the high from February 9.
Meanwhile, euro-denominated gold futures jumped 1.4% to trade at EUR1,325.60, the highest since February 6.
Gold prices broke higher after Reuters reported that EU officials are looking at ways to delay the second bailout and still avoid a default amid concerns that political leaders in Greece are not fully committed to implementing harsh austerity measures demanded by international creditors.
According to the article, top-rated sovereigns Germany, Finland and the Netherlands are leading the push to delay Greece’s bailout until April.
Without a bailout, Greece faces the threat of defaulting when a EUR14.5 billion bond redemption comes due on March 20.
Euro zone finance ministers have replaced a meeting aimed at signing off on Greece’s bailout scheduled to take place later in the day with a conference call, after failing to receive assurances on how Athens plans to implement fiscal reforms approved in a parliamentary vote on Sunday.
Gold is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.
Meanwhile, hedge fund manager and long-time gold bull John Paulson reduced his gold holdings by nearly USD600 million during the fourth quarter, according to a filing with the Securities and Exchange Commission late on Tuesday.
Paulson & Company cut its stake in the SPDR Gold Trust, the biggest exchange-traded fund backed by the precious metal, to 17.3 million shares in the final three months of 2011 from 20.2 million in the third, a second straight reduction that was likely driven by client redemption needs.
Many gold traders have been worried of mass liquidation by Paulson and what that would do to investor psychology in the gold market. Gold prices tumbled 11% in September amid widespread talk of possible selling by big hedge funds covering losses in other markets.
However, other major market players added to their holdings, with billionaire financier George Soros modestly increasing his position in the ETF to around USD13 million in the fourth quarter.
Major institutional investors, including PIMCO and the Teacher Retirement System of Texas also boosted their GLD holdings.
Elsewhere on the Comex, silver for March delivery rallied 1.45% to trade at USD33.84 a troy ounce, while copper for March delivery eased up 0.1% to trade at USD3.817 a pound.
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