Gold futures push higher in holiday-thinned trade

Shutterstock photo - - Gold futures were higher in pre-holiday trade during European morning hours on Monday, moving further away from last week's four-month low as investors continued to monitor negotiations among U.S. lawmakers to avoid the looming "fiscal cliff" crisis.

Trading was expected to remain subdued, with year-end positioning driving flows and as holidays in many countries limit activity. Lower-than-usual volumes could spark volatile trading, resulting in rapid changes in metal prices during the final weeks of the year.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,664.95 a troy ounce during European morning trade, up 0.3% on the day.

Prices held in a tight trading range between USD1,652.75 a troy ounce, the daily low and a session high of USD1,666.45 a troy ounce.

Gold prices tumbled to USD1,636.45 a troy ounce on Friday, the cheapest level since August 22, as a bout of technical selling set in after prices broke below their 200-day moving average, triggering fresh sell orders amid bearish chart signals.

Gold prices were likely to find support at USD1,636.45 a troy ounce, Friday's low and resistance at USD1,672.75, Thursday's high.

Market remained focused on developments surrounding the fiscal cliff in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.

Doubts over whether a deal will be reached ahead of the year-end intensified last week after Republican House Speaker John Boehner failed to get his caucus' support for his so-called "Plan B" fiscal cliff option, which called for tax increases only on Americans earning USD1 million or more per year.

The U.S. House has adjourned for the Christmas holiday, fueling speculation that policymakers will not be able to avert the fiscal cliff. Without a deal, the U.S. could fall back into recession and drag much of the world down with it.

Weakness in the U.S. dollar provided support to gold's strength. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.15% to trade at 79.52.

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.

Elsewhere on the Comex, silver for March delivery rose 0.45% to trade at USD30.33 a troy ounce, while copper for March delivery eased down 0.1% to trade at USD3.564 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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