Gold shoots up as dollar falls on U.S. data, fiscal uncertainty
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 high.
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 bolstered gold.
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 the process.
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 prices.
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 to 7.0.
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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