Gold falls as U.S. stocks bounce back
Published Feb 22, 2013 01:17PM ET
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery are lower by 0.39% at USD1,572.50 per troy ounce in U.S. trading Friday. Gold futures were likely to test support USD1,546.35 a troy ounce, the low from June 1, 2012, and resistance at USD1,618.70, Monday's high.
While U.S. stocks have not reclaimed all of their losses from the previous two sessions, Friday’s bounce has been enough to send investors and traders in search of riskier fare. The S&P 500 reclaimed the psychologically important 1,500 level today, giving traders confidence that the two-day sell-off may be overdone.
The U.S. Dollar Index is also trading slightly higher at this writing, which is weighing on dollar-denominated gold.
Although the dollar is trading slightly higher against the euro at this writing, a report released earlier today showed German business confidence jumped to a 10-month high in February, giving traders further reason to eschew gold’s safe-haven reputation. Germany is the euro zone’s largest economy.
On Thursday, gold futures fell to a seven-month low on speculation the Federal Reserve is preparing to slow its USD85 billion-a-month asset-buying program, also known as quantitative easing. Monetary easing programs usually depress currencies, in this case the dollar, which can translate to upside for commodities such as gold.
With fears heightened that an end to QE in the U.S. is imminent, the dollar has gained strength in recent weeks while gold looks poised to extend a multi-week losing streak.
On a related note, the SPDR Gold Shares, the world’s largest exchange traded fund backed by physical holdings of gold, will likely see its biggest weekly outflow in 18 months when the closing bell rings later today.
Elsewhere, Comex silver for March delivery plunged 1.06% to USD28.398 per ounce while copper for March delivery fell 0.57% to USD3.533 per ounce.
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Written By: Investing.com
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