Investing.com - Gold prices extended gains to hit the highest level in nearly six weeks on Tuesday, as a broadly weaker U.S. dollar and losses in global equity markets boosted the safe-haven appeal of the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery rose by as much as 2.23% to touch a daily high of $1,222.20, the most since October 29, before trading at $1,218.40 during U.S. morning hours, up $23.10, or 1.94%.
A day earlier, gold picked up $4.50, or 0.38%, to settle at $1,194.90.
Futures were likely to find support at $1,186.40, the low from December 5, and resistance at $1,230.40, the high from October 29.
Also on the Comex, silver futures for March delivery surged 46.1 cents, or 2.83%, to trade at $16.73 a troy ounce.
The US dollar index, which measures the greenback against a basket of six major currencies, weakened from Monday's five-year high of 89.53 to trade at 88.65, down 0.6%.
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, in Asia, China’s Shanghai Composite plunged more than 5% to record its biggest one-day loss since August 2009 as investors headed for the exits amid growing concerns over the health of China's economy.
Stock markets in Europe were also sharply lower, with Germany's DAX dropping 1.5%, while Spain's IBEX 35 and Italy's FTSE MIB both lost nearly 2%.
Despite recent gains, gold prices are likely to remain vulnerable in the near-term amid indications a strengthening U.S. economic recovery will force the Federal Reserve 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 inched up 0.6 cents, or 0.22%, to trade at $2.892 a pound.