Forexpros - Gold futures ticked up and down between small gains and losses on Tuesday, as investors remained on the sidelines amid expectations for action by the European Central Bank to tackle the long running debt crisis in the euro zone.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,613.85 a troy ounce during early European trade, dipping 0.02%.
Gold futures were likely to test support at USD1,601.80 a troy ounce, Monday’s low and resistance at USD1,627.50, the high of July 31.
Expectations that the ECB will soon take steps to help lower Spanish and Italian borrowing costs have been building since ECB head Mario Draghi indicated last week that the bank may restart its bond buying program.
Investors remained wary amid concerns over how effective the ECB’s new bond buying program would be, in the light of differences from the bank’s existing scheme.
Draghi also said that any steps by the bank were conditional on euro zone governments experiencing difficulty on bond markets activating the bloc’s bailout funds to purchase government bonds and accepting strict conditions and supervision.
Investors were waiting to see if Spain or Italy request assistance from the bloc’s bailout funds, after Spanish Prime Minister Mariano Rajoy indicated last week that Madrid may ask for European Financial Stability Facility aid.
Market participants also remained cautious after U.S. data last week showing an unexpected increase in the U.S. unemployment rate last month kept alive expectations for another round of quantitative easing from the Federal Reserve.
The U.S. economy added 163,000 jobs in July, the biggest increase since February and outstripping expectations for an increase of 100,000, but the unemployment rate unexpectedly ticked up to 8.3%, from 8.2% in June.
Gold and the dollar trade inversely, and talk the Fed is considering easing can weaken the greenback and send the yellow metal higher.
Elsewhere on the Comex, silver for September delivery inched up 0.04% to trade at USD27.873 a troy ounce, while copper for September delivery edged up 0.01% to USD3.389 a pound.
