Shutterstock photo
Markets

Gold futures pare gains, hover below USD1,700 an ounce

Shutterstock photo

Shutterstock photo

Forexpros - Gold futures pared gains on Monday, easing off the record high as the U.S. dollar turned higher against the euro, while an historic downgrade of U.S. sovereign debt and ongoing fears over sovereign debt contagion in the euro zone supported safe haven demand.

On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,695.05 a troy ounce during U.S. morning trade, climbing 1.8%.

It earlier rose as much as 2.9% to trade at an all-time high of USD1,716.25 a troy ounce, eclipsing the previous high of USD1,683.45 a troy ounce it hit last Thursday.

Gold prices have climbed to record highs in 11 of the past 19 sessions.

The U.S. dollar erased losses against the euro after a move by the European Central Bank to purchase Italian and Spanish government bonds failed to ease fears that the debt crisis could spill over to the region's third and fourth largest economies.

The dollar strengthened 0.7% against the single currency to hit 1.4179, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.32% to trade at 75.01.

Gold prices often move inversely to the U.S. dollar, as gold becomes more expensive for buyers using other currencies.

Meanwhile, concerns over the U.S. economic outlook were exacerbated after ratings agency Standard and Poor's downgraded the U.S. sovereign debt rating by one notch to AA+ from AAA after markets closed Friday.

The ratings agency kept the U.S. rating outlook at negative, suggesting a further downgrade could be possible within the next 12 to 18 months.

S&P said the debt ceiling deal reached by lawmakers to cut the federal deficit by an estimated USD2.1 trillion over a decade did not go far enough and "America's governance and policymaking is becoming less stable, less effective, and less predictable than what we previously believed."

U.S. Treasury Secretary Timothy Geithner sharply criticized S&P's decision, saying the ratings agency "has shown really terrible judgment and they've handled themselves very poorly".

Wall Street investment bank Goldman Sachs raised its three-month average gold price forecast to USD1,645 an ounce, up from a previous estimate of USD1,565 an ounce.

Goldman also raised its six-month price forecast by 5.5% to USD1,730 an ounce and its 12-month price forecast to USD1,860 an ounce, up 7% from a previous projection.

Elsewhere on the Comex, silver for September jumped 1.92% to trade at USD39.10 a troy ounce, while copper for September delivery shed 0.53% to trade USD4.097 a pound.

Forex News

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.

Other Topics

ForEx