Forexpros – Gold futures traded lower Friday despite a weak U.S dollar on strong German confidence.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,775.55 a troy ounce during early U.S. trade, falling 0.63%.
It is trading near the session low and hit a high of USD1784.25 per barrel.
Futures were likely to find support at USD1,732.35 a troy ounce, Tuesday’s low and technical resistance exists at USD1,784.25 today’s high.
Gold fell despite the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, falling 0.43% to trade at 78.34.
A stronger U.S. dollar usually weighs on gold, as it decreases the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Increasing euro zone confidence, the ECB may be tapped next week for EUR470 billion in three year funds for distribution on February 29.
This is nearly the same amount that was provided in December, according to a Bloomberg survey.
This infusion of cash is expected to prolong the rally in the bond markets and will be used primarily to support the Italian and Spanish bond markets.
Euro zone inflation is in check and no floor exists under the 1% interest rate, ECB council member Erkki Liikanen told CNBC, calming fears of upside risk in the region.
Gold selling was spurred when Germany posted better than expected business climate index figures. The Munich based Ifo institute’s business climate index climbed to 109.6 in February from 108.3 in January.
However, the European Commission changed its November economic growth forecast for 0.05% growth to a 0.3% contraction in the euro zone.
The EU expects the economy to shrink 1.3% in Italy and give back 1% in Spain.
Trying to ease the worry, European Union Economic and Monetary Commissioner, Olli Rehn stated, “Although growth has stalled, we are seeing signs of stabilization in the European economy. Economic sentiment is still at low levels, but stress in financial markets is easing.”
In Greek news, German Chancellor Angela Merkel stated she will keep the pressure on Greece to meet its debt cutting pledge as many remain skeptical of Greek’s true intentions.
Applications for jobless benefits in the U.S. were unchanged in the week ending February 18 at 351,000. This marks the fewest number of people on unemployment benefit rolls since 2008, signaling continued improvement in the world’s largest economy
While gold is traditionally viewed as a safe haven, the metal has been tracking riskier assets in the past few months as the turmoil caused by the euro zone debt crisis forces investors to sell their profitable gold positions to cover losses elsewhere.
Elsewhere on the Comex, silver for March delivery tumbled 0.35% to trade at USD35.43 a troy ounce, while copper for March delivery moved higher 1.52% to trade at USD3.86 a pound.
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