By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — Gold futures rose on Wednesday, extending an advance from the previous session, amid growing optimism on progress toward a solution to Europe’s debt troubles.
Gold for December delivery GCZ2 +0.18% advanced $8.00 to $1,754.90 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.
Gold closed higher on Tuesday to notch its first advance in three sessions, after reports that Spain was considering applying for a credit line from the European Union’s bailout fund helped support the euro against the dollar.
The euro extended gains against rivals, including the U.S. dollar, on Wednesday in Asia hours after Moody’s Investors Service affirmed Spain’s sovereign rating at Baa3 albeit with a negative outlook.
Weakness in the dollar tends to aid dollar-denominated commodities, such as gold, because it makes them cheaper for holders of other currencies.
Commerzbank commodity strategists said that, with prices lower following a recent drop, “physical buying interest in Asia ahead of the festival season in India can be expected to pick up, thereby stabilizing prices.”
The strategists also said that monetary policy and supply could prove supportive for the precious metal.
“Ultra-expansionary monetary policy pursued by central banks suggests that the gold price will rise again in the near future, as do the ongoing strikes in the South African gold mines,” they said.
Strikes in South Africa are thought to be affecting half of the gold production of this fifth-largest gold producer country, they noted.
December silver futures SIZ2 +0.16% SIZ2 +0.16% SIZ2 +0.16% rose 17 cents to $33.13 an ounce, while copper HGZ2 +0.05% for delivery in the same month tacked on 1 cent to trade at $3.71 a pound.
January platinum PLF3 +0.75% climbed $12.40 an ounce to $1,657.60 while December palladium PAZ2 +0.49% rose $3.80 to $642.75 an ounce.
Sarah Turner is MarketWatch's bureau chief in Sydney.
