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Gold futures edge higher on dollar weakness, euro zone debt woes

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Forexpros - Gold futures were higher on Wednesday, hovering close to the psychologically-important level of USD1,800-an-ounce as the U.S. dollar came under broad selling pressure and amid ongoing concerns over the euro zone's sovereign debt crisis.

On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,792.65 a troy ounce during U.S. morning trade, edging 0.32% higher.

It earlier rose as much as 1.35% to trade at USD1,795.95 a troy ounce, the highest price since August 11, when prices rose to an all-time high of USD1,815.65 a troy ounce.

The euro jumped to a three-week high against the U.S. dollar, trading above 1.4500, as the single currency found support amid speculation the European Central Bank was buying Italian and Spanish government debt, in an effort to ease pressure on the region's third and fourth largest economies.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.71% to hit 73.52, the lowest since May 5.

Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.

Meanwhile, prices were supported after Tuesday's meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy failed to ease concerns over the euro zone's ongoing sovereign debt crisis.

The two leaders proposed a new council to improve the governance of the euro zone and planned to introduce a financial transaction tax in September.

But they fell short of increasing the region's bailout fund, which many feel is inadequate should the debt crisis spread to Italy, Spain or France.

They also rejected issuing euro bonds, saying that the bonds will not solve the single currency bloc's debt issues, disappointing investors who had been anticipating such an action.

Elsewhere on the Comex, silver for September rose 0.73% to trade at a two-week high of USD40.34 a troy ounce, while copper for September delivery climbed 1.65% to trade USD4.058 a pound.

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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.

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