Forexpros – Gold futures pushed higher Monday, as expectations that euro zone policy makers will approve a second bailout for Greece and the introduction of fresh monetary easing by China increased the appeal of the yellow metal.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,735.45 a troy ounce during late U.S. trade, advancing 0.55%.
It earlier rose by as much as 0.75% to trade at USD1,738.65 a troy ounce, the highest since February 15.
Futures were likely to find short-term support at USD1,718.65 a troy ounce, Friday’s low and technical resistance at USD1,754.95, the high from February 9.
Trading volumes were expected to remain thin throughout the U.S. session as Comex floor trading was to remain closed for the U.S. Presidents Day holiday. Electronic trades were to be booked with Tuesday’s transactions for settlement purposes.
Optimism over Greece’s chances of obtaining its second bailout package sent the euro to a one-week high against the U.S. dollar.
Gold prices remain more sensitive to moves in the euro/dollar exchange rate than to rising risk aversion, which in the past has been a positive driver of prices.
Speaking prior to a meeting of euro zone finance ministers set for later Monday, Greek Finance Minister Evangelos Venizelos said negotiations on the EUR130 billion bailout and a linked debt restructuring deal would continue until the last minute, but added that Greece has met all the conditions demanded by its creditors.
Greece has a EUR14.5 billion bond repayment due on March 20 and requires the bailout funding in order to be able to make that payment and avoid a messy default.
Gold prices have moved in a range between USD1,700 and USD1,760 since the beginning of February, with prices closely tracking investor sentiment towards the region’s ongoing debt crisis.
Gold prices spiked higher during the Asian trading session, as sentiment was lifted after the People’s Bank of China announced that it cut the reserve requirement ratio for banks by 50 basis points, the second cut in nearly three months.
The move was expected to free up as much as CNY400 billion in an effort to boost lending and spur growth in the world’s second-biggest economy.
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, boosting the metal’s appeal as an inflation hedge.
Elsewhere on the Comex, silver for March delivery surged 1.13% to trade at USD33.59 a troy ounce, while copper for March delivery jumped 1.13% to trade at USD3.75 a pound.
&nb
Forexpros
