Gold futures rallied to settle higher Wednesday, mostly on bargain buying as prices for the precious metal dropped to a low of $1532 an ounce during the day, notwithstanding the strong U.S. dollar. Nonetheless, investors continued to be concerned of the eurozone debt crisis, with fears that the malady could spread from Greece to Spain and Italy.
Gold for August delivery, the most actively traded contract, gained $14.70 or 1 percent to close at $1,565.70 an ounce Wednesday on the Comex division of the New York Mercantile Exchange.
Gold traded at an intraday high of $1,567.30 an ounce and a low of $1,532.10 an ounce.
Yesterday, gold ended sharply lower on a strong U.S. dollar, while Europe continued to be in focus. The dollar surged to its highest since July 2010 on news reports of Spain's credit rating downgrade,
Earlier this morning, the U.S. dollar continued to extend its two-year high versus the euro, while hovering around a two-month high against the sterling.
The dollar index, which tracks the U.S. unit against six major currencies, was trading at its highest since July 2010. The greenback traded at 82.861 on Wednesday, up from 82.468 in North American trade late Tuesday. The dollar scaled a high of 82.94 intraday and a low of 82.48.
The euro traded lower against the dollar at $1.2402 on Wednesday, as compared to $1.2493 late Tuesday. The euro scaled a high of $1.2505 intraday and a low of 1.2388.
In economic news, pending home sales in the U.S. unexpectedly decreased in April, according to a report by the National Association of Realtors Wednesday. The drop follows three consecutive monthly gains. The pending home sales index tumbled 5.5 percent to 95.5 in April after rising 3.8 percent to a downwardly revised 101.1 in March. The drop was surprising as economists expected pending home sales to edge up 0.5 percent. Nonetheless, the index moved up 14.4 percent when compared to April 2011.
A pending home sale is one in which a contract has been signed but not yet closed. It would normally take four to six weeks to close a contracted sale.
Elsewhere, eurozone economic confidence declined more than expected to 90.6 in May from a revised 92.9 in April, survey results from European Commission showed. Economists expected the index to drop to 91.9. Industrial confidence deteriorated to -11.3 in May from -9 in April. Economists anticipated a drop to -10.2.
European stock markets reacted sharply to the economic confidence report, but stemmed further losses following an European Commission statement that suggested use of the European Stability Mechanism Fund (the permanent rescue fund) to bail out troubled banks. The commission also proposed a mechanism for banking supervision union for the currency union to support the banking system.
by RTT Staff Writer
For comments and feedback: editorial@rttnews.com
Market Analysis