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Gold climbs on bullish economic data, weak USD

Published 04/20/2012, 10:52 AM
Updated 04/20/2012, 10:54 AM
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Investing.com - Gold futures moved higher Friday as bullish European economic data helped spur interest in the precious metal.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,645.65 a troy ounce during  U.S. trade, gaining 0.22%.      

Gold traded at a low of USD1639.15 a troy ounce and hit a high of USD1647.95 a troy ounce during the session.

Gold futures were likely to find support at USD1,613.55 a troy ounce, the low from April 4 and resistance at USD1,681.15, the high from April 12.

Gold traders looked to the currency market for price direction, as prices have been tracking movements in the euro in recent weeks. 

Gold remains more sensitive to moves in the euro/dollar exchange rate in the short term than to rising risk aversion, which in the past has been a positive driver of prices.

The U.S. dollar is trading sharply lower with the U.S. dollar index, which tracks the greenback against a portfolio of other currencies, moved lower by 0.54%

The gold rally was fueled as German ifo business climate surprised economists climbing to 109.9 from 109.8 the previous month.

Economists expected a drop to 109.5.

Germany is the euro zone’s largest economy therefore German economic improvements are a major supporter of the risk on trade.

Meanwhile, the IMF is meeting with Group of 20 officials, on the heels of IMF director Christine Lagarde saying Thursday, she expects more contributions in her campaign for a larger bailout fund.

Investors will closely watch a policy meeting at the Federal Reserve next week, seeking hints on the central bank's attitude towards monetary easing. Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.

Elsewhere on the Comex, silver for May delivery fell 0.48% to trade at USD31.63 a troy ounce, while copper for May delivery soared 1.85% to trade at USD3.695 a pound.

Copper is surging as mining companies are failing to keep up with demand in the face of increasing global growth prospects.





 

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