Investing.com - Gold futures rose to the highest levels of the session during U.S. morning trade on Tuesday, as investors looked ahead to the European Central Bank's policy meeting later in the week.
Gold traders also remained focused on the outlook for Federal Reserve monetary policy, as well as political developments in the U.S.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,657.05 a troy ounce during U.S. morning trade, up 0.65% on the day.
Prices rose by as much as 0.75% earlier in the day to hit a session high of USD1,658.45 a troy ounce. Gold futures fell to USD1,626.05 a troy ounce on January 4, the lowest level since August 21.
Gold prices were likely to find support at USD1,626.05 a troy ounce, the low from January 4 and resistance at USD1,690.55, January 3's high.
Investors are taking a wait-and-see approach ahead of a policy meeting by the European Central Bank on Thursday to see if the central bank will modify its benchmark interest rate.
Official data released earlier showed that German factory orders fell 1.8% in November, compared to expectations for a 1.4% decline as overseas demand declined.
Meanwhile, Eurostat said the unemployment rate in the euro zone hit a new record high of 11.8% in November, up from 11.7% in October, underlining concerns over the outlook for growth in the region.
A separate report showed that euro zone retail sales increased 0.1% in November, compared to expectations for a 0.3% rise.
Overall market sentiment remained cautious amid uncertainty about continuing political wrangling in Washington over further U.S. budget cuts and raising the U.S. debt ceiling.
Gold futures tumbled to a four-month low last week after the minutes from the Federal Reserve's December meeting indicated that the central bank could end its quantitative easing program earlier-than-expected.
According to the minutes, several Fed officials thought the central bank would be able to slow or stop its bond-buying program well before December 2013.
The Fed's quantitative easing program is viewed by many investors as a major source of liquidity that weakens the U.S. dollar and helps support prices of commodities and other hard assets, including gold.
Elsewhere on the Comex, silver for March delivery added 1.1% to trade at USD30.40 a troy ounce, while copper for March delivery eased up 0.1% to trade at USD3.680 a pound.
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