Forexpros – Gold futures traded higher Thursday, on the back of a weak U.S. dollar and increased risk appetite triggered by German economic numbers and Greek debt deal hopes.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,702.25 a troy ounce during U.S. afternoon trade, climbing 1.09%.
It earlier rose by as much as 1.2% to trade at a two-day high of USD1,704.55 a troy ounce.
Gold futures were likely to find support at USD1,663.75 a troy ounce, Tuesday’s low and resistance at USD1,709.75, Tuesday’s high.
German industrial output increased more than forecast in January on increased construction activity, increasing the appetite for the precious metal.
Production climbed 1.6% from December. Economists were expecting an increase of 1.1% in the euro zone’s largest economy.
Risk sentiment improved as prospects for a successful Greek deal increased after a group of major banks and funds said they would cooperate with the swap.
Private bondholders representing around 60% of Greece’s outstanding private-sector debt have indicated they will participate in the swap, according to Bloomberg.
Rumors that the number was closer to 73% resulted in prices spike higher to the session high, before retracing.
A senior Greek finance ministry official told Reuters the government was hopeful that well over 75% of eligible bonds would be submitted, easily clearing the original minimum threshold it had set for the deal to proceed.
The swap is vital for Greece to cut its debt and secure a bailout of EUR130 billion. Without the aid package, Greece will likely default.
The euro pushed higher against the U.S. dollar on the news, trading at a four-day high, while the dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.76% to trade at 79.12.
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.
In addition Thursday, the European Central Bank left its benchmark interest rate unchanged at 1% for the third consecutive month in March.
Speaking at the bank’s post policy meeting press conference ECB President Mario Draghi said he expected the euro zone’s economy to “gradually” recover in the course of the year.
Draghi added that inflation will stay above 2% in 2012 and added that the region’s outlook was subject to downside risk related to increases in energy prices.
The precious metal came under heavy selling pressure in recent weeks after Fed Chairman Ben Bernanke disappointed financial markets when he failed to signal another imminent round of monetary easing.
Elsewhere on the Comex, silver for May delivery plunged 0.97% to trade at USD33.91 a troy ounce, while copper for May delivery traded higher by 0.70% to trade at USD3.79 a pound.
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