Forexpros – Gold futures traded higher in early U.S. trade Friday as worries over Europe’s debt crisis leads to demand for wealth protection
On the Comex division of the New York Mercantile Exchange, Gold futures for August delivery traded at USD1570.65 a troy ounce at time of writing rising 0.33%.
It earlier traded at a session high USD1572.85 a troy ounce. Gold was likely to find support at USD1560.45 and resistance at USD1634.25.
Increasing the wealth protection appeal of gold, Germany’s Ifo business climate fell more-than-expected last month, data showed on Friday.
In a report, the Ifo Institute for Economic Research said its index of German business climate fell to 105.3, from 106.9 in the preceding month .
Analysts had expected the index to fall to 105.9 last month.
On Thursday, Spain’s Treasury sold EUR602 million worth of five-year government bonds at an average yield of 6.072% earlier in the day, up sharply from 4.752% at a similar auction last month.
Demand was stronger, however, with bids exceeding supply 3.44 times versus a “bid-to-cover” ratio of 3.14 in May.
Spain also sold EUR918 million of three-year debt at an average yield of 5.547%, up from 4.876% at a similar auction last month. The bid-to-cover ratio stood at 3.18, compared to 3.01 at an auction in May.
The country also auctioned EUR700 million of two-year debt at an average yield of 4.706%, compared to 4.335% at a similar auction last month. The bid-to-cover ratio stood at 3.97, compared to 2.81 at an auction in May.
In total, Spain’s Treasury sold EUR2.22 billion of government debt, above the full targeted amount of EUR2 billion.
Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves.
The yield on Spanish 10-year bonds eased to 6.65% following the auction, down from 6.74% before the results. Yields hit a record high 7.28% on Monday.
Meanwhile, the Federal Reserve increased its Operation Twist but it is widely viewed as not adequate to stem the global slowdown, increasing demand for gold.
U.S. home sales and manufacturing fell more than expected weighing on risk sentiment Thursday
US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, fell 0.03% to trade at USD82.53.
Elsewhere on the Comex, Silver for July delivery rose 0.04% to trade at USD26.85 a troy ounce while Copper for July delivery fell 0.40% to trade at USD3.287 a pound.
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