Forexpros – Gold prices rose Wednesday as a year-end selloff by hedge funds finally wrapped up and investors went long on the metal, buoyed by a weaker dollar and Fitch Ratings comments that France’s AAA ratings were safe.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,632.85 a troy ounce, up 0.08%.
Gold futures were likely to test support at USD1,606.05 a troy ounce, Monday’s low, and resistance at USD1,641.15, Tuesday’s high.
Hedge funds ditched gold at the end of 2011, but markets are now starting to view the metal as ripe for gains.
Fitch Ratings said it would likely not downgrade France, which was bullish for European stocks, assets that have moved in lockstep with gold in recent months.
Meanwhile global aluminum giant Alcoa’s earnings came in line with expectations although revenue came in better than expected.
An improving outlook for metals and hopes for a better European economy mean inflation pressures may inch upward, which is often bullish for gold.
The dollar, meanwhile, regained its strength in Asian trading after weakening earlier.
Gold and the dollar often trade inversely from one another.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.26% at 81.36.
Elsewhere on the Comex, silver for March delivery rose 0.14% to trade at USD28.858 a troy ounce, while copper for March delivery traded up 0.78% to trade at USD3.478 a pound.
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