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Gold gains on falling European borrowing costs

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Investing.com -

Investing.com - Gold futures rose on Monday after the euro softened due to the European Central Bank's recently policy move, through a stronger U.S. dollar capped the yellow metal's gains.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at 1,253.60 a troy ounce during U.S. trading, up 0.09%, up from a session low of $1,251.70 and off a high of $1,257.20.

The August contract settled down 0.06% at $1,252.50 on Friday.

Futures were likely to find support at $1,241.20 a troy ounce, Thursday's low, and resistance at $1,258.20, Friday's high.

The European Central Bank's recent decision to loosen policy coupled with expectations for the Federal Reserve to wind down stimulus programs this year reflected in bond markets on Monday, which weakened the euro and gave gold room to rise.

The yield on Spain's 10-year bonds fell to 2.6% on Monday, falling below their U.S. equivalent which was yielding 2.61%. The yield on Ireland's 10-year bonds fell to a euro-era record low of 2.61% while the yield on German 10-year bonds fell to their lowest against their U.S. counterpart since 2005.

Last Thursday, the ECB unveiled a package of measures to battle persistently low inflation rates in the euro area, including cuts to interest rates, while solid U.S. unemployment data kept expectations firm for the Federal Reserve to wind down its monthly asset-purchasing program this year.

Expectations for an end to monetary stimulus tools in the U.S. strengthened the dollar, which watered down gold's gains as the greenback and the yellow metal tend to trade inversely with one another.

The dollar, meanwhile, continued to see support on solid U.S. unemployment data, which also dampened gold's advance.

On Friday, the U.S. Labor Department reported that the economy added 217,000 in May, close to expectations for a 218,000 increase, after a 282,000 rise in April, whose figure was revised down from a previously estimated 288,000 gain.

The private sector added 216,000 jobs last month, exceeding expectations for a 210,000 gain, which drew market applause and firmed the dollar.

It was the fourth consecutive month in which the U.S. economy added more than 200,000 new nonfarm payrolls.

The private sector added 216,000 jobs last month, exceeding expectations for a 210,000 gain.

Meanwhile, silver for July delivery was up 0.38% at $19.063 a troy ounce, while copper futures for July delivery were down 0.14% at $3.047 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.


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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