By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Gold futures moved sideways in a narrow range in electronic trading Wednesday after a two-day losing run, as investors looked toward this week’s summit of European leaders for fresh cues .
Prices of the precious metal for delivery in February GC2G +0.05% were up $2.60, or 0.2%, at $1,734.40 a troy ounce on the Comex division of the New York Mercantile Exchange during Asian trading hours. The metal’s prices moved in a range between $1,729.90 and $1,735.30.
Gold prices had declined in the past two sessions, with Tuesday’s losses coming in the wake of Standard & Poor’s warning that it may downgrade the credit ratings on the sovereign debt of as many as 15 euro-zone countries.
“The S&P credit watch is a reflection of stresses in the euro zone, which argue for lower gold prices,” HSBC Securities analyst James Steel said in a note to clients.
However, “on balance, we believe that the [European Union] summit will boost gold prices, unless ratings agencies further downgrade euro-zone nations’ credit ratings,” he said.
Leaders from 27 European Union countries are meeting this Friday in Brussels to discuss proposals for more stringent fiscal regulations and treaty changes. Read blog about European bond yields and the EU summit.
“In a turbulent year for world economies and markets, the price of gold reached an all-time high in September, and after a setback, is recovering. The yellow metal looks poised for loftier levels next year,” Terry Hanlon, president of Dillon Gage Metals, said in emailed comments.
The U.S. dollar index DXY -0.07% , a measure of the greenback’s performance against six other major currencies, traded at 78.448, not far from the 78.498 level seen in North American trade late Tuesday.
Asian stock markets were higher on Wednesday, meanwhile, following a newspaper report that the EU may bolster the firepower of its rescue funding. Read Asia Markets.
EU officials were discussions on the possibility of allowing the euro zone’s 440 billion euro ($590 billion) bailout fund to remain in operation when a new 500 billion facility comes into force in 2012, the Financial Times reported. Read more about the report.
Among other precious metals, the January contract for platinum PL2F +0.75% rose 0.6% to $1,532.80 an ounce, while prices of silver for March delivery SI2H +0.02% eased 0.3% to $32.64 an ounce.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
