Investing.com - Gold prices rallied on Wednesday as the dollar
fell amid concerns a U.S. fiscal showdown may threaten to shut down
the government, while lackluster U.S. data coupled with a
better-than-expected German sentiment report weakened the dollar as
Gold and the dollar tend to trade inversely with one another.
On the Comex division of the New York Mercantile Exchange, gold
futures for December delivery traded at USD1,335.10 during U.S.
afternoon hours, up 1.43%.
Gold prices hit a session low of USD1,316.70 a troy ounce and high
of USD1,338.30 a troy ounce.
Gold futures were likely to find support at USD1,306.20 a troy
ounce, Tuesday's low, and resistance at USD1,375.10, Thursday's
The December contract settled down 0.81% at USD1,316.30 a troy
ounce on Tuesday.
The House of Representatives recently approved legislation to fund
government through Dec. 15, however, lawmakers also voted to defund
President Barack Obama's healthcare bill, the Affordable Care Act.
While the bill faces little chance of survival, concerns that
Democrats and Republicans will go back and forth crafting and
rejecting spending proposals as the U.S. runs close to hitting its
debt ceiling repelled investors away from the greenback, which
Failure to agree on a solution could result in a government
shutdown in October.
Spotty data in the U.S. weakened the greenback by keeping investors
unable to guess when the Federal Reserve will begin to taper the
size or pace of its asset-purchasing program, which seeks to spur
recovery by driving down interest rates, weakening the dollar in
In a report, the Census Bureau said that U.S. new home sales rose
7.9% to a seasonally adjusted 421,000 units in August from a
downwardly revised 390,000 in July. Analysts were expecting new
home sales to rise to 420,000 units last month.
A separate report showed that U.S. core durable goods orders,
excluding transportation items, fell 0.1% in August, disappointing
expectations for a 1% increase, after an upwardly revised 0.5%
contraction the previous month.
Overall durable goods orders in the U.S. rose 0.1% last month,
short of expectations for a 0.2% increase following a downwardly
revised 8.1% decline in July.
Meanwhile in Europe, solid German consumer confidence bolstered
demand for the euro over the dollar, often a recipe for rising gold
The forward looking GfK index of German consumer confidence rose to
7.1 for October, while September's reading was revised up from 6.9
Analysts were expecting the October figure to come in at 7.0
Elsewhere on the Comex, silver for December delivery was up 1.35%
at USD21.877 a troy ounce, while copper for December delivery was
up 0.41% and trading at USD3.270 a pound.
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