Forexpros – Gold prices rose in Asian trading on Tuesday as investors snapped up nicely priced positions in the yellow metal after it tanked amid an earlier rush to the dollar stemming from European political unease and weak output data out of Germany.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded up 0.27% at USD1,637.05 a troy ounce.
Gold traded at a low of USD1,636.95 a troy ounce and hit a high of USD1,639.85 a troy ounce during the session.
The precious metal sought to test support at USD1,613.55 a troy ounce, the low of April 4, and resistance at USD1,679.15, the high on April 13.
Gold hit a two-week low in European and U.S. trading after French election results and a near collapse of the Dutch government sparked a rally for the metal’s traditional hedge, the dollar.
In France, President Nicolas Sarkozy trailed Socialist challenger Fran?ois Hollande in Sunday’s elections, leaving both candidates headed to a runoff in May.
Right-wing candidate Marine Le Pen surprised the world by taking nearly 20 percent of the votes, well above expectations, underscoring frustration with the crisis and its painful austerity measures.
Hollande has said he does not favor current austerity measures and wants to rewrite the eurozone’s fiscal pact in a way to focus more on growth, and talk of a reverse-course in policy and friction with other European nations like Germany sparked demand for the safe-haven dollar.
In the Netherlands, a breakdown in budget negotiations prompted Dutch Prime Minister Mark Rutte to offer his cabinet’s resignation to the Dutch queen, who will consider it, although the government will keep plugging away to find an exit strategy from the impasse.
Meanwhile in Germany, Europe’s largest economy, the country’s important manufacturing sector may be suffering from dropping demand in the crisis-wracked periphery countries.
Markit’s manufacturing Purchasing Managers Index for Germany dropped to 46.3 in April from 48.4 in March, far below expectations for an increase to 49.0.
The index hasn’t fallen that low since 2009.
Eurozone manufacturing output data also disappointed, while concerns Chinese manufacturing may be cooling also sparked demand for safe-haven currencies like the dollar and yen, which sent gold falling before bottom fishers snapped it up.
In the U.S. expectations are fading the Federal Reserve will resort to fresh stimulus measures to jolt the economy.
The Federal Reserve’s monetary policy body, the Federal Open Market Committee, is set to address interest rates and whether the economy merits further stimulus measures.
Since the downturn, the Federal Reserve has pumped trillions of dollars into the U.S. economy by buying assets from banks, a stimulus policy known officially as quantitative easing.
Mere talk the Federal Reserve will consider more quantitative easing has sent the dollar falling and gold rising in recent months, although sentiment continued to build in Asian trading on Tuesday that the Fed will signal later this week that it sees no need for intervention as of now.
Elsewhere on the Comex, silver for July delivery was up 0.77% and trading at USD30.835 a troy ounce, while copper for July delivery was down 0.32% and trading at USD3.635 a pound.