Investing.com - Gold futures rose to the highest level in two weeks on Wednesday, while silver and copper surged as the U.S. dollar came under heavy selling pressure after U.S. lawmakers managed to push through a last-minute budget deal, thus averting the effects of the fiscal cliff.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,692.85 a troy ounce during U.S. morning trade, up 1% on the day.
Prices rose by as much as 1.2% earlier in the session to hit a daily high of USD1,695.35 a troy ounce, the strongest level since December 18.
Gold prices were likely to find support at USD1,652.75 a troy ounce, the low from December 24 and near-term resistance at USD1,704.35, the high from December 18.
Elsewhere on the Comex, silver for March delivery soared 3.9% to trade at USD31.40 a troy ounce, while copper for March delivery rallied 2.75% to trade at USD3.753 a pound.
The U.S. House of Representatives voted Tuesday night in favor of a deal to avert the fiscal cliff, blocking a series of looming tax increases and spending cuts that could have pushed the U.S. economy back into a recession.
The final vote tally was 257 to 167. The passage came after the Senate approved the measure by a large majority of 89-8 early Tuesday morning.
The bill, which raises taxes for the wealthy and delays spending cuts for two months, now heads to the White House, where President Barack Obama is expected to sign it into law.
Metal prices remained higher after data showed that manufacturing activity in the U.S. expanded at a faster rate than expected in December.
The Institute for Supply Management said its index of purchasing managers rose to 50.7, up from 49.5 in November, compared to expectations for a reading of 50.3.
The rally also followed official data Tuesday showing that China's manufacturing Purchasing Managers' Index expanded for the third consecutive month in December.
The PMI held steady at 50.6 last month, above the 50.0-point mark that indicates an improvement in activity.
Weakness in the U.S. dollar provided further support. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.4% to trade at 79.56, close to a two-week low.
Dollar-denominated commodity contracts tend to rise when the dollar falls, as it makes them cheaper for buyers in other currencies.
Metal traders are now looking ahead to Friday's highly-anticipated data on U.S. nonfarm payrolls, as investors attempt to gauge the strength of the country's economic recovery.
Any improvement in the U.S. economy could scale back expectations for further easing from the Federal Reserve.
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