Forexpros – Gold futures remained lower on Wednesday, as a broadly stronger U.S. dollar pressured prices, while investors continued to eye developments surrounding the debt crisis in the euro zone.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,764.95 a troy ounce during U.S. morning trade, dropping 0.97%.
It earlier fell by as much as 1.15% to trade at a daily low of USD1,761.65 a troy ounce.
Gold’s losses came as the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.35% to trade at 78.38. It earlier rose to 78.60, the highest since October 10.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Meanwhile, the yield on Italian 10-year bond yields hovered close to the 7% threshold widely seen as unsustainable, despite the European Central Bank supporting the regional bond by purchasing Italian and Spanish government debt.
Fears that the debt crisis will spill over the region’s banking sector resurfaced after the largest Italian lender Unicredit said it would ask the ECB to extend its access to funding.
While the news would have normally boosted the precious metal, investors preferred to sell profitable gold holdings to raise cash and cover losses elsewhere.
Gold prices found support after the U.S. Department of Labor said the consumer price index dropped 0.1% in October. Analysts had forecast CPI would be flat last month after rising 0.3% in September.
The decline potentially gives the Federal Reserve more leeway to introduce further stimulus measures to boost the U.S. economy.
Elsewhere on the Comex, silver for December delivery tumbled 1.7% to trade at USD33.86 a troy ounce, while copper for December delivery dropped 1.2% to trade at USD3.460 a pound.
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