Investing.com - Gold futures traded sharply lower Tuesday, as growing fears over a potential Greece debt default prompted investors to move to the relative safety of the U.S. dollar.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,673.45 a troy ounce during early U.S. afternoon trade, tumbling 1.79%.
Gold futures were likely to find support at USD1,649.25 a troy ounce, the low from January 25 and resistance at USD1,717.65, the previous day’s high.
Markets remained nervous ahead of the March 8 deadline for private bondholders to join the agreement under which they will exchange their existing Greek government bonds for new paper in a swap deal.
Earlier in the day, Greek finance minister Evangelos Venizelos strongly urged private sector creditors to take part in the debt swap deal and warned that it was the best offer they would receive.
At least 66% of private sector bondholders must be willing to participate in the deal. However, only 20% of the private creditors have agreed to the plan, increasing sovereign default fears.
The news saw the U.S. dollar strengthen to a two-and-a-half week high against the euro. 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 dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.54% to trade at 79.85,, the highest since February 16.
Although gold’s appeal as a safe-haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal. A weakening euro and stronger dollar have weighed on gold instead.
Meanwhile, market participants also cited steady selling by macro funds and institutional investors. Some traders also sold profitable gold positions to offset losses in other markets, while others pulled cash out of broader markets on concerns of a sharper downturn.
Prices came under further pressure as investors remained wary from entering the market, amid a weak near-term technical outlook for the precious metal.
Market participants noted that gold prices remain vulnerable to a further pullback in the short-term, should prices drop below a key technical support level.
Gold has held its 200-day-moving average, currently at USD1,675 an ounce, since mid-January. Should it slip below that level, analysts said the metal could test USD1,650.
Elsewhere on the Comex, silver for May delivery plunged 2.55% to trade at USD32.94 a troy ounce, while copper for May delivery tumbled 3.01% to trade at USD3.74 a pound.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,673.45 a troy ounce during early U.S. afternoon trade, tumbling 1.79%.
Gold futures were likely to find support at USD1,649.25 a troy ounce, the low from January 25 and resistance at USD1,717.65, the previous day’s high.
Markets remained nervous ahead of the March 8 deadline for private bondholders to join the agreement under which they will exchange their existing Greek government bonds for new paper in a swap deal.
Earlier in the day, Greek finance minister Evangelos Venizelos strongly urged private sector creditors to take part in the debt swap deal and warned that it was the best offer they would receive.
At least 66% of private sector bondholders must be willing to participate in the deal. However, only 20% of the private creditors have agreed to the plan, increasing sovereign default fears.
The news saw the U.S. dollar strengthen to a two-and-a-half week high against the euro. 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 dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.54% to trade at 79.85,, the highest since February 16.
Although gold’s appeal as a safe-haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal. A weakening euro and stronger dollar have weighed on gold instead.
Meanwhile, market participants also cited steady selling by macro funds and institutional investors. Some traders also sold profitable gold positions to offset losses in other markets, while others pulled cash out of broader markets on concerns of a sharper downturn.
Prices came under further pressure as investors remained wary from entering the market, amid a weak near-term technical outlook for the precious metal.
Market participants noted that gold prices remain vulnerable to a further pullback in the short-term, should prices drop below a key technical support level.
Gold has held its 200-day-moving average, currently at USD1,675 an ounce, since mid-January. Should it slip below that level, analysts said the metal could test USD1,650.
Elsewhere on the Comex, silver for May delivery plunged 2.55% to trade at USD32.94 a troy ounce, while copper for May delivery tumbled 3.01% to trade at USD3.74 a pound.