FX:Gold re-approaches 11-month high ahead of ECB, U.S. jobs data eyed
Forexpros - Gold futures were higher during European morning hours on Thursday, re-approaching an 11-month high hit earlier in the week, as markets focused on the European Central Bank's interest rate decision later in the day and Friday’s U.S. non-farm payrolls data.
Uncertainty over whether Spain will soon request a full scale sovereign bailout also remained.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,789.05 a troy ounce during European morning trade, adding 0.5%.
Prices rose by as much as 0.7% earlier in the session to hit a daily high of USD1,791.95 a troy ounce. Gold futures rallied to USD1,793.85 a troy ounce on October 1, the highest level since November 14, 2011.
Gold prices were likely to find support at USD1,765.75 a troy ounce, the low from October 1 and near-term resistance at USD1,793.85.
Later in the day, the ECB was to announce its benchmark interest rate. The announcement was to be followed by a press conference with bank head Mario Draghi, which will be closely watched for details of the bank’s bond purchasing program.
Markets were eyeing an auction of 2-, 3- and 5-year Spanish government bonds later in the day, as it was expected to be an important test of investor appetite for the troubled country’s debt.
Market players have been anticipating for the past month that the Spanish government would ask for a full-scale sovereign bailout, but Spain’s Prime Minister Mariano Rajoy denied a request for external financial assistance was imminent earlier in the week.
A bailout would allow the ECB to step in and buy Spanish sovereign debt, which would result in reduced borrowing costs for the debt-strapped nation. But Spain has been reluctant to do so because it may come with conditions on its budget.
Gold traders also looked ahead to Friday’s key U.S. non-farm payrolls data, which will allow investors to gauge the strength of the labor market. The Federal Reserve said last month it will purchase USD40 billion of mortgage-backed securities every month until the labor market improves.
Minutes from that September Fed meeting will be released later in the day.
Elsewhere on the Comex, silver for December delivery climbed 0.7% to trade at USD34.93 a troy ounce, while copper for December delivery added 0.35% to trade at USD3.796 a pound.
