Gold gains, but strong dollar still a factor
Published Feb 18, 2013 08:31PM ET
Investing.com - Gold futures traded higher in the early part of Tuesday’s Asian session, but the stronger U.S. dollar is seen as keeping a lid on bullion’s near-term upside.
On the Comex division of the New York Mercantile Exchange, gold futures for April deliver rose 0.19% to USD1,612.90 per troy ounce in Asian trading Tuesday. The yellow metal earlier traded as high as USD1,614.70 an ounce.
Gold futures were likely to test support USD1,598.25 a troy ounce, Friday's low, and resistance at USD1,670.25, the high from Feb. 11.
Activity in gold and other commodities was quiet Monday because U.S. markets were closed in observance of the Presidents Day holiday.
More importantly, the U.S. dollar is coming off five consecutive weekly advances and the greenback’s sudden bullishness is seen as a real problem for gold. Commodities, gold included, are denominated in dollars and usually display an inverse relationship to the U.S. currency. Along those lines, further dollar strength could present hurdles for gold and take the yellow metal below critical support at USD1,600 per ounce.
Adding to the glum news for gold is data from the U.S. Commodity Futures Trading Commission, which shows hedge funds, traders and other market participants are reducing their net long exposure to gold futures and options contracts. Last week, long interest in gold futures and options contracts traded in the U.S. was 70,250 contracts down from over 86,000 contracts the prior week.
Traders also pared long exposure to silver, but modest increases in net long exposure to platinum and palladium were seen. Short interest in palladium also fell a bit.
Speaking of the other metals, Comex silver for March delivery added 0.58% to USD30.023 per ounce while copper for March delivery gained 0.26% to USD3.694 per ounce.
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Written By: Investing.com
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