By Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures edged higher Tuesday, finding support as a drop in U.S. consumer confidence, a weak stock market and uncertainty ahead of the European Union summit buoyed the metal’s safe-haven appeal.
Gold for December delivery GC1Z +2.01% rose $3.50, or 0.2%, to $1,655.80 an ounce on the Comex division of the New York Mercantile Exchange.
“Gold has edged higher ... as concerns about the European debt crisis and the risk of contagion are leading to demand for gold for wealth-preservation purposes,” said analysts at GoldCore in a note Tuesday.
A meeting of European Union finance ministers that had been set to take place ahead of Wednesday’s much-anticipated summit of European leaders in Brussels has been canceled, news reports said. The leaders’ summit, however, is set to continue.
GC1Z 1,685.10, +33.30, +2.02%
DXY 76.17, +0.02, +0.03%
20%10%0%-10%
ASO
Still, the cancellation raises doubts among some investors about the ability of EU leaders to conclude a broad plan to address the euro-zone debt crisis, amid talk of ongoing disagreements over how to leverage the region’s bailout fund, impose larger write-downs on the private sector’s Greek bond holdings and recapitalize the region’s banks.
“The likelihood of the euro zone sorting out their intractable problems has come into question again as ... Europe’s largest banks have clashed with politicians about the size of losses they will have to take on their Greek debt,” GoldCore analysts said.
Looking further ahead, “the euro-zone project must either jump to default or devaluation,” said Adrian Ash, head of research at BullionVault.com. “That can only bring gold to the fore for investors everywhere.”
Meanwhile, some downbeat U.S. economic data also helped fuel gold’s gains.
Consumers became more pessimistic in October as confidence dropped to the lowest level since March 2009, the Conference Board reported. The consumer-confidence index declined to 39.8 in October from 46.4 a month earlier. Read more about consumer confidence.
“The consumer confidence numbers were very soft today and this is weighing on equities and supporting Treasurys,” said Charles Nedoss, senior market strategist with Olympus Futures in Chicago.
Dollar and bullion said back in sync
Still, gold has come off the highs as the dollar bounced, he said.
The dollar index DXY +0.03% , which measures the U.S. unit against a basket of six major currencies, rose to 76.400 from 76.082 late Monday. Read more on currencies.
“The dollar and gold have returned to their normal relationship as the dollar is finding support on its 100-day moving average (of 76.18) and gold has hit resistance on its 100-day moving average (at $1,663.30),” said Nedoss.
In other metals trading Tuesday, copper pulled back after sizable gains in the past two sessions. December copper HG1Z -0.75% shed 7 cents to $3.38 a pound.
However, silver for December delivery SI1Z +1.80% rose 29 cents to $31.93 an ounce, while January platinum PL2F +1.20% was up $7 at $1,549 an ounce and December palladium PA1Z +0.92% rose $1.10 to $639.60 an ounce.
Myra Saefong is a MarketWatch reporter based in San Francisco.
