NEW YORK—Gold futures were near steady as traders awaited the release of the results of stress tests on European banks.
The most actively traded contract for August delivery rose $2.20, to $1,197.80 an ounce on the Comex division of the New York Mercantile Exchange.
"Until fears over sovereign debt risk and spiralling inflation are allayed, investors are likely to continue to turn to gold," said Suki Cooper, commodities analyst with Barclays Capital.
Gold is sometimes bought as a hedge against instability by those seeking to protect purchasing power when currencies or equities are unstable. Worries about euro-zone debt and a slowing U.S. recovery propelled gold to records in May and June, but the metal's upward march was halted by increasing stability this month.
Many traders are waiting for Friday's results of stress tests on euro-zone banks, due out after the close of European equities markets, before making bets on gold, analysts said. The tests, meant to show the ability of the euro zone's largest financial institutions to respond to continued swings in the economy, are likely to be viewed as a barometer of Europe's progress in managing its debt levels. Better-than-expected results may reduce interest in precious metals as refuge assets, but disappointing news could send investors seeking safety in gold.
Gold has made brief rallies this week, but has failed to hold above the $1,200 an ounce mark as some strong U.S. corporate earnings reports led investors to favor equities and industrial commodities.
Precious metals futures remain range-bound, as traders have looked for direction from equities markets still weighing the severity of Europe's fiscal woes and the impact of earnings season. The most-active contract has traded between $1,215 and $1,180 since July 2.
UBS increased its forecast for gold prices Friday, citing continued sovereign debt concerns and an uncertain outlook for global central bank monetary policy. The Swiss banking giant raised its average gold price for 2010 by 6.7%, to $1,205 an ounce, and $1,295 an ounce the following year.
