Gold moves further off 7-month low as markets await Italy results

Investing.com - Gold futures were higher during European morning trade on Monday, moving further off last week’s seven-month low as investors eyed the outcome of a closely contested election in Italy.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,590.30 a troy ounce during European morning trade, up 1.1% on the day.

Prices rose by as much as 1.2% earlier in the session to hit a daily high of USD1,592.00 a troy ounce. Gold futures fell to a seven-month low of USD1,554.80 a troy ounce on February 21.

Gold prices were likely to find support at USD1,554.80 a troy ounce, the low from February 21 and resistance at USD1,609.00, the high from February 20.

Gold prices were higher as investors remained wary ahead of the results of Italy’s election, amid concerns that a hung parliament could hamper efforts to implement further economic reforms and lead to instability in the euro zone’s third largest economy.

The results of the election were expected to be known on Tuesday, but exit polls were due to be published on Monday afternoon.

The precious metal continued to draw support from reassuring comments from a Federal Reserve official on Friday. St. Louis Fed President James Bullard said that the central bank's aggressive monetary policy will stay in place for a "long time."

The comments helped ease concerns the central bank will end its quantitative easing program sooner-than-expected.

Gold futures sold off last week after the minutes of the Fed’s January meeting showed that policymakers discussed the slowing or stopping of USD85 billion in monthly bond purchases even before the job market improves.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would pump more money into the financial system.

Some bargain-hunting and technical buying also contributed to gains as investors entered the market after prices bounced off a key support level.

Market analysts noted that gold prices found support at the USD1,550-level, prompting investors to enter the market and open fresh long positions amid bullish chart signals.

Elsewhere on the Comex, silver for May delivery surged 2.1% to trade at USD29.10 a troy ounce, while copper for May delivery tacked on 0.3% to trade at USD3.561 a pound.

Copper traders digested data showing manufacturing activity in China expanded at the slowest rate in four months in February, but remained in expansion territory.

China’s HSBC Flash Purchasing Managers Index, the earliest indicator of the country's industrial activity, fell to a four-month low of 50.4 in February from a final reading of 52.3 in January.

The measure however still remains above 50.0, indicating an expansion in manufacturing activity.

China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.