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Gold hits session high after downbeat U.S. data; Spain budget eyed

Published 09/27/2012, 10:16 AM
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Investing.com - Gold futures rose to the highest levels of the session during U.S. morning hours on Thursday, as the U.S. dollar weakened following the release of a raft of broadly weaker-than-expected U.S. data, while investors awaited Spain’s budget statement.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,767.65 a troy ounce during U.S. morning trade, adding 0.8%.      

Earlier in the session prices rose by as much as 0.95% to trade at a daily high of USD1,770.45 a troy ounce. Gold futures fell to a two-week low of USD1,739.35 a troy ounce on Wednesday.

Gold prices were likely to find short-term support at USD1,739.35 a troy ounce, the previous day’s low and resistance at USD1,787.55, the high from September 21.

Official data showed that the U.S. economy expanded 1.3% in the second quarter, down from a preliminary estimate of 1.7%. Economists had expected the rate of growth to remain unchanged.

Meanwhile, official data showed that U.S. durable goods orders fell 13.2% in August, the steepest decline since January 2009, compared to expectations for a 5.0% decline.

A separate report showed that the number of people who filed for unemployment assistance in the U.S. last week fell by 26,000 to 359,000, compared to expectations for a decrease to 378,000.

Also Thursday, data released by the National Association of Realtors showed that U.S. pending home sales dropped 2.6% in August, compared to expectations for a 0.7% decline.

The dollar index, which tracks the performance of the U.S. dollar against a basket of six other major currencies, declined 0.1% to trade at 79.80.

Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.

Meanwhile, investors were jittery ahead of a press conference to announce the details of Spain’s draft budget statement for 2013, amid ongoing speculation over whether Madrid will seek a full-scale sovereign bailout.

Yields on Spain's benchmark 10-year government bond topped 6% for the first time in three weeks on concerns the country will run into problems financing itself.

Elsewhere on the Comex, silver for December delivery rose 1.1% to trade at USD34.32 a troy ounce, while copper for December delivery eased up 0.05% to trade at USD3.711 a pound.

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