By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — Gold futures extended a recent rally on Wednesday, as technical buying supported the metal.
Gold futures for December delivery GCZ2 +0.06% edged $1.10 higher, or 0.1%, to $1,644.10 an ounce in electronic trade.
On Tuesday, prices reached a three-and-half month high as the dollar weakened on increased hopes that the European Central Bank will take steps to reduce borrowing costs for Spain and Italy.
Dollar-denominated commodities tend to rise on a weaker dollar, as they get cheaper for holders of other currencies.
The ICE dollar index DXY +0.04% swung between small gains and losses and was down to 81.921 from 81.939 in late North American trade.
“Yesterday, the [gold] price did break out of its trading range, which triggered follow up buying. Moreover, the price is now in vicinity of the 200-day moving average, which also attracts technical buying,” Carsten Fritsch, analyst at Commerzbank said, in emailed comments.
“That said, fundamentals are rather putting the brakes on the euphoria,” analysts from the bank said, in a note.
“The Bombay Bullion Association (BBA) expects Indian gold imports from September to December to total just 200-250 tons on the back of record-high gold prices in local currency, high inflation and the poor monsoon season. If its prediction is correct, this would be as much as 50% down on the previous year’s figure.”
For Wednesday’s action, investors were awaiting the release of minutes from the U.S. Federal Reserve’s rate-setting committee’s July meeting to shed light on the prospects of further monetary easing.
Elsewhere in the metals complex, prices were mixed. Copper for September delivery HGU2 -0.23% slipped 0.2% to $3.45 a pound, while silver for the same month SIU2 +0.04% was marginally higher at $29.43 an ounce.
October platinum PLV2 +0.80% added 1% to $1,522.10 an ounce, while September palladium PAU2 +1.12% rose 1.2% to $631.95 an ounce.
Sara Sjolin is a MarketWatch reporter, based in London.
