FX:Gold remains below USD1,700 ahead of ECB, U.S. data
Forexpros - Gold futures traded near the previous session’s four-week low on Thursday, with prices remaining below the key USD1,700-level, as market players looked ahead to the European Central Bank's policy decision later in the day and U.S. jobs data on Friday.
Investors also continued to monitor negotiations among U.S. lawmakers to avoid the looming “fiscal cliff” crisis.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,690.35 a troy ounce during European morning trade, down 0.2% on the day.
Prices fell by as much as 0.35% earlier in the day to trade at a session low of USD1,688.25 a troy ounce.
Comex gold futures fell to a four-week low of USD1,686.15 a troy ounce on Wednesday, as a bout of technical selling set in after futures fell through key support levels, triggering a flurry of sell orders amid bearish chart signals.
Gold prices were likely to find support at USD1,672.55 a troy ounce, the low from November 5 and resistance at USD1,708.25, the previous day’s high.
The ECB was widely expected to keep rates unchanged at 0.75% later Thursday, while a post-policy meeting press conference by President Mario Draghi would be closely watched for indications on the future direction of monetary policy.
Gold traders are also looking ahead to Friday’s key U.S. nonfarm payrolls data for November, as investors attempt to gauge the strength of the U.S. economy and the need for further monetary stimulus from the Federal Reserve.
Any improvement in the U.S. economy could scale back expectations for further easing, boosting the U.S. dollar and weighing on dollar-denominated commodities.
Meanwhile, investors continued to monitor developments surrounding the fiscal cliff in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1, unless a divided Congress and the White House can work out a compromise in the four weeks left before the deadline.
President Barack Obama reassured markets Wednesday, saying that if Republicans accept tax hikes on wealthier Americans, a deal could be pushed through in "about a week."
President Obama said recently that any solution must include spending cuts and raising revenue, including increasing taxes on the wealthiest. Republican leaders say they will agree to higher revenue, but they want to close loopholes or reduce tax breaks rather than raise rates.
Elsewhere on the Comex, silver for March delivery shed 0.6% to trade at USD32.75 a troy ounce, while copper for March delivery declined 0.5% to trade at USD3.669 a pound.
