Forexpros – Gold futures traded higher Tuesday, as investors anticipated Wednesday’s launch of the European Central Bank’s second three-year long-term refinancing operation.
On the Comex division of the New York Mercantile Exchange, gold futures for April settlment traded at USD1,780.25 a troy ounce during late U.S. trade, gaining 0.72%.
It earlier hit a high of USD1,791.65 a troy ounce, the highest since February 23.
Futures were likely to find support at USD1,763.25 a troy ounce, Monday’s low and technical resistance at USD1,791.65, this session’s high.
Gold’s gains arrived as the euro traded close to a three-month high against 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 dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.43% to trade at 78.30.
Gold traders anxiously antcipate Wednesday’s launch of the ECB’s second three-year long-term refinancing operation, after a similar liquidity injection in December averted a credit crunch and eased pressure on euro zone bond markets.
Market participants expect the liquidity operation to total nearly EUR500 billion, after borrowing EUR489 in the December operation.
Gold can benefit from such an environment of easy money because of expectations that ample liquidity would put a damper on the value of paper currencies and boost inflation.
Gold prices have rallied nearly 13% since the beginning of 2012, boosted by growing expectations for further monetary easing measures from global central banks.
Global financial service provider HSBC Holdings stated earlier, “Gold may be entering a period of consolidation. The inability of the market to clear the November 8 high of $1,803 an ounce is leading to light profit-taking.”
Elsewhere on the Comex, silver for May delivery soared 4.25% to trade at a five-month high of USD37.12 a troy ounce, while copper for May delivery gained 0.56% to trade at USD3.91 a pound.
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