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Gold edges higher on Asian buying interest, gains capped by dollar

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Shutterstock photo - Gold futures edged mildly higher during European morning hours on Tuesday, as physical dealers and jewelers in Asia continued to take advantage of cheap valuations.

Gains were limited by a stronger U.S. dollar as well as a weak technical picture.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,613.50 a troy ounce during European morning trade, up 0.25% on the day.

Prices held in a tight trading range between USD1,614.80 a troy ounce, the daily high and a session low of USD1,609.40 a troy ounce. Gold futures fell to USD1,598.25 a troy ounce last Friday, the weakest level since August 15.

Gold prices were likely to find support at USD1,590.25 a troy ounce, the low from August 15 and near-term resistance at USD1,635.95, February 15's high.

Strong physical demand in Asia supported prices as markets in mainland China reopened Monday following the week-long Lunar New Year holiday.

China is the world's second-largest consumer of the precious metal, behind India.

Gains were limited as the dollar index, which tracks the performance of the greenback against a basket of six other major currencies, hovered near a six-week high of 80.77.

A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

Market players remained wary ahead of the upcoming Italian general elections next week, amid concerns that a hung parliament could hamper ongoing efforts at economic reforms.

A weak technical picture also weighed as investors remained hesitant to enter the market and open fresh long positions amid bearish chart signals.

Gold prices fell below the key USD1,600-level for the first time since August last Friday, as a bout of technical selling set in after futures broke through key support levels, triggering a flurry of sell orders.

From a technical standpoint, gold could see further losses, with market analysts warning of a possible move towards the USD1,550-level.

Gold traders now looked ahead to the release of the minutes of the Federal Reserve's January meeting on Wednesday for hints regarding the central bank's attitude towards monetary policy.

Any policy pause signal from the Fed minutes may send the U.S. dollar higher, pressuring dollar-denominated commodities.

U.S. housing data due this week will also be in focus as investors seek more cues on the country's economic health.

Any improvement in the U.S. economy could scale back expectations for further easing from the Fed.

Elsewhere on the Comex, silver for March delivery added 0.5% to trade at USD29.99 a troy ounce, while copper for March delivery dropped 1.65% to trade at USD3.676 a pound. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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