FX:Gold inches lower with U.S. fiscal cliff, Middle East violence in focus
Forexpros - Gold futures inched lower during European morning hours on Thursday, as renewed tension in the Middle East and mounting fears over the looming fiscal crisis in the U.S. kept investors on edge.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,725.75 a troy ounce during European morning trade, down 0.25% on the day.
Prices traded in a tight range between USD1,727.85 a troy ounce, the daily high and a session low of USD1,722.75 a troy ounce.
Gold prices were likely to find near-term support at USD1,717.85 a troy ounce, Tuesday’s low and resistance at USD1,737.95, the high from November 11.
Investors remained concerned over the looming “fiscal cliff” in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.
Obama is set to meet with congressional leaders on Friday to discuss the country’s fiscal situation. There are fears the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise before the January 1 deadline.
Meanwhile, geopolitical tensions in the Middle East increased after Israel assassinated a senior Hamas commander on Wednesday. The U.N. Security Council will hold a closed emergency meeting on Wednesday to discuss Israeli strikes against the Gaza Strip.
Prices remained supported after the minutes of the Federal Reserve's latest policy meeting pointed toward more easing measures in the future.
The Fed indicated in the minutes of its October policy meeting that the central bank may need to expand its monthly purchases of bonds next year, after the expiration of a program to extend the maturities of assets on its balance sheet, known as Operation Twist.
The discussion indicates that Fed officials judge the economy still needs record stimulus to reduce an unemployment rate stuck near 8%.
Later in the day, the U.S. was to release reports on initial jobless claims and consumer price inflation, in addition to data on manufacturing activity in New York and Philadelphia.
Meanwhile, a speech by Federal Reserve Chairman Ben Bernanke was to be closely watched for any indications on the future possible direction of monetary policy.
Elsewhere on the Comex, silver for December delivery shed 0.6% to trade at USD32.68 a troy ounce, while copper for December delivery added 0.4% to trade at USD3.466 a pound.
