Gold extends gains into third session with Greece in focus

Investing.com - Gold futures were up for the third consecutive session on Tuesday, as safe-haven demand was boosted amid growing fears that Greece might exit the euro zone.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery hit a session high of $1,214.40, the most since December 16, before trading at $1,211.60 during U.S. morning hours, up $7.60, or 0.63%.

A day earlier, gold rallied $17.80, or 1.5%, to settle at $1,204.00 an ounce.

Futures were likely to find support at $1,177.80, the low from January 5, and resistance at $1,223.90, the high from December 16.

Also on the Comex, silver futures for March delivery picked up 6.5 cents, or 0.4%, to trade at $16.27 a troy ounce.

Appetite for safe-haven assets remained supported amid uncertainty over Greece’s future in the euro zone if left-wing anti-austerity party Syriza win elections due to be held later this month.

Meanwhile, oil prices continued to tumble on Tuesday to hit the lowest level since spring 2009, as investors piled on to their short positions in anticipation of lower prices amid lingering concerns over a growing supply glut.

London-traded Brent prices declined $1.48, or 2.78%, to $51.64 a barrel, while Nymex oil futures dropped $1.27, or 2.55%, to end at $48.77.

In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market. Wednesday’s Federal Reserve meeting minutes will be also closely watched.

Gold lost nearly 2% in 2014 amid indications a strengthening U.S. economic recovery will force the Fed to start raising interest rates sooner and faster than previously thought.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

Elsewhere in metals trading, copper for March delivery dipped 0.7 cents, or 0.27%, to trade at $2.759 a pound.

The US dollar index, which measures the greenback against a basket of six major currencies, traded near a nine-year high, boosted by the diverging policy outlook between the Federal Reserve and central banks in Europe and Japan.

A stronger dollar reduces demand for raw materials as an alternative investment and makes dollar-priced commodities more expensive for holders of other currencies.