FX:Gold futures little changed as stronger dollar weighs
Forexpros - Gold futures were little changed during European morning trade on Monday, as the fiscal uncertainty surrounding Spain and Greece continued to drive investors to the relative safety of the U.S. dollar.
Growing expectations the Bank of Japan will introduce more monetary easing measures at its next policy meeting on October 30 supported the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,711.65 a troy ounce during European morning trade, nearly flat on the day.
Prices held in a tight trading range of USD1,717.85 a troy ounce, the daily high and a session low of USD1,710.85 a troy ounce. Gold futures fell to a seven-week low of USD1,699.65 a troy ounce on October 24.
Gold prices were likely to find support at USD1,688.85 a troy ounce, the low from September 7 and resistance at USD1,731.25, the high from October 22.
Trading activity was expected to remain thin on Monday, as a result of the first unscheduled, market-wide shut down since September 2001, as Hurricane Sandy approached the northeastern U.S.
Gold’s losses came as the euro re-approached a three-week low against the U.S. dollar, while the dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.27% to trade at 80.32, close to a seven-week high.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Markets were jittery amid ongoing uncertainty over whether Spain is preparing to request a bailout from its euro zone partners, which would activate a bond buying program by the European Central Bank.
Meanwhile, doubts over whether Greece can meet austerity targets demanded by the troika mounted after the country’s opposition leaders said his party would vote against an austerity package expected to go before parliament later this week.
The yellow metal was supported as traders turned their attention to the outcome of Tuesday’s Bank of Japan policy meeting amid ongoing speculation over the possibility of more easing from the central bank.
Expectations of monetary stimulus tend to benefit gold, as the precious metal is seen as a safe store of value and inflation hedge.
Gold traders were also awaiting Friday’s closely-watched U.S. nonfarm payrolls data after the unemployment rate unexpectedly fell to 7.8% in September from 8.1% the previous month.
Doubts over the U.S. economic recovery persisted in spite of Friday’s better-than-expected data on U.S. third quarter growth.
The U.S. economy grew by 2% in the three months to September, on the back of stronger consumer spending, after expanding by 1.3% in the preceding quarter. Economists had predicted growth of 1.9%.
From a technical standpoint, the precious metal could see further losses in the near-term after having failed to break above the key USD1,800-level earlier in the month.
Gold futures rallied to an 11-month high of USD1,798.05 a troy ounce on October 5, boosted by ongoing expectations policymakers around the world will launch more stimulus to support the weak global economy.
Elsewhere on the Comex, silver for December delivery shed 0.3% to trade at USD31.93 a troy ounce, while copper for December delivery fell 0.75% to trade at USD3.522 a pound.
