Gold prices edged up on Tuesday boosted by Italy’s credit downgrade and weak data from China, which fueled fears that the global economy still faces headwinds.
Spot gold is trading around $1582.38 per ounce by 08:48 (GMT+2) after opening at $1578.04, hitting a high of $1584.39 and a low of $1575.636 an ounce.
Italy’s sovereign credit rating was downgraded by Fitch Ratings agency, reigniting fears over the eurozone debt crisis. Fitch lowered Italy’s rating by one notch to BBB+ late Friday, citing fears of a further deterioration in Italy’s economy as political impasse continues.
Data released on Monday showed that Italy’s GDP was at 0.9 percent contraction for the fourth quarter of 2012, while it revised higher to 2.8 percent contraction on the yearly basis.
Italy has been in recession since the middle of 2011. The euro area’s third-largest economy is not expected to post any growth until the second half of 2013 at the earliest.
European Union chiefs will meet later this week to discuss Cyprus bailout, as leaders have yet to reach an agreement with the International Monetary Fund (IMF) and the new government.
The euro is trading at $1.3016 as of 08:52 AM (GMT +2) after opening at $1.3045. The EUR / USD pair has so far set a session high at $1.3045 and low of $1.3014.
On the other hand, China`s economic recovery signaled an upcoming dilemma for monetary policymakers, as official data over the weekend showed inflation at a 10-month high in February, which stoked concerns that Beijing will hold off on stimulus measures.
China reported annual industrial production expansion at the slowest pace since 2009, while its consumer price index jumped more than expected last month to 3.2 percent.
The dollar was firm against the euro and other major currencies, following better-than-expected data of unemployment dipping to a four-year low on Friday. However, worries over the U.S. budget crisis curbed optimism over the health of the global economy.
As of 08:50 (GMT+2), the dollar index hovered around 82.71 after opening at 82.57, where it hit a high of 82.71 and a low of 82.57.
On Monday, the Dow industrial average hit a record high for the fifth consecutive session, while S&P 500 added 0.3 percent, the highest levels since October 2007.
Silver traded at $28.93 an ounce after opening at $28.95, hitting high at $29.03 and low at $28.90 an ounce.
Among other precious metals, spot palladium dropped 0.65 percent to $771.15 an ounce, p latinum fell 0.09 percent to $1,599.62 per ounce.