Investing.com - Gold futures added to gains during U.S. morning hours on Tuesday, bouncing off the lowest level in a month as the U.S. dollar came under pressure on reports Spain was moving closer to requesting a bailout.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,747.65 a troy ounce during U.S. morning trade, gaining 0.6%.
Prices rose by as much as 0.65% earlier in the session to hit a daily high of USD1,748.45 a troy ounce. Gold futures touched a low of USD1,730.15 a troy ounce on Monday, the weakest level since September 13.
Gold futures were likely to find support at USD1,705.55 a troy ounce, the low from September 13 and resistance at USD1,755.45, the high from October 14.
Sentiment strengthened after two senior German lawmakers indicated that they would support a Spanish application for a ‘precautionary credit line’ from the European Stability Mechanism, the euro zone’s permanent bailout fund.
On Monday, Spanish government officials said they were exploring the option of requesting a credit line from the ESM, in order to satisfy the terms of the European Central Bank’s bond buying program, but then not using it, instead waiting for borrowing costs to fall.
Market players have been anticipating for the past month that the Spanish government would ask for a full-scale sovereign bailout.
A bailout would allow the ECB to step in and buy Spanish sovereign debt, which would result in reduced borrowing costs for the debt-strapped nation. But Spain has been reluctant to do so because it may come with conditions on its budget.
European Union policymakers will hold a two-day summit in Brussels starting on Thursday to discuss ways to firewall and extinguish the debt crisis as well as Greece's steps towards fiscal recovery.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, declined 0.5% to trade at 79.39, the lowest since October 5.
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.
Also Tuesday, the U.S. Labor Department said consumer prices rose by 0.6% in September, above expectations for a 0.5% gain on the back of higher gasoline prices.
Consumer prices, excluding food and energy costs, rose 0.1% last month, compared to expectations for a 0.2% increase. Core consumer prices eased up 0.1% in August.
Elsewhere on the Comex, silver for December delivery rose 0.85% to trade at USD33.02 a troy ounce, while copper for December delivery added 0.4% to trade at USD3.716 a pound.
Copper traders were looking ahead to Chinese third quarter growth figures due out on Thursday, to gauge whether the world second largest economy is heading towards a hard or a soft landing.
Official data released Monday showed that Chinese consumer prices rose 1.9% in September from the year-ago period, in line with expectations and down from 2.0% in August, while producer price inflation fell 3.6%, also in line with expectations.
The data came after a report over the weekend showed that Chinese exports grew 9.9% on the year in September, above expectations for a 5.5% gain. Imports rose 2.4% from a year earlier, in line with expectations.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,747.65 a troy ounce during U.S. morning trade, gaining 0.6%.
Prices rose by as much as 0.65% earlier in the session to hit a daily high of USD1,748.45 a troy ounce. Gold futures touched a low of USD1,730.15 a troy ounce on Monday, the weakest level since September 13.
Gold futures were likely to find support at USD1,705.55 a troy ounce, the low from September 13 and resistance at USD1,755.45, the high from October 14.
Sentiment strengthened after two senior German lawmakers indicated that they would support a Spanish application for a ‘precautionary credit line’ from the European Stability Mechanism, the euro zone’s permanent bailout fund.
On Monday, Spanish government officials said they were exploring the option of requesting a credit line from the ESM, in order to satisfy the terms of the European Central Bank’s bond buying program, but then not using it, instead waiting for borrowing costs to fall.
Market players have been anticipating for the past month that the Spanish government would ask for a full-scale sovereign bailout.
A bailout would allow the ECB to step in and buy Spanish sovereign debt, which would result in reduced borrowing costs for the debt-strapped nation. But Spain has been reluctant to do so because it may come with conditions on its budget.
European Union policymakers will hold a two-day summit in Brussels starting on Thursday to discuss ways to firewall and extinguish the debt crisis as well as Greece's steps towards fiscal recovery.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, declined 0.5% to trade at 79.39, the lowest since October 5.
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.
Also Tuesday, the U.S. Labor Department said consumer prices rose by 0.6% in September, above expectations for a 0.5% gain on the back of higher gasoline prices.
Consumer prices, excluding food and energy costs, rose 0.1% last month, compared to expectations for a 0.2% increase. Core consumer prices eased up 0.1% in August.
Elsewhere on the Comex, silver for December delivery rose 0.85% to trade at USD33.02 a troy ounce, while copper for December delivery added 0.4% to trade at USD3.716 a pound.
Copper traders were looking ahead to Chinese third quarter growth figures due out on Thursday, to gauge whether the world second largest economy is heading towards a hard or a soft landing.
Official data released Monday showed that Chinese consumer prices rose 1.9% in September from the year-ago period, in line with expectations and down from 2.0% in August, while producer price inflation fell 3.6%, also in line with expectations.
The data came after a report over the weekend showed that Chinese exports grew 9.9% on the year in September, above expectations for a 5.5% gain. Imports rose 2.4% from a year earlier, in line with expectations.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.