Investing.com - Gold futures held on to mild losses on Monday, but were off the lowest levels of the day as the previous week’s sharp drop created buying opportunities for investors as they continued to monitor developments surrounding Greece’s debt swap deal.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,706.05 a troy ounce during U.S. morning trade, dipping 0.22%.
It earlier fell by as much as 0.98% to trade at a two-day low of USD1,695.55 a troy ounce.
Gold futures were likely to find support at USD1,689.95 a troy ounce, the low from February 29 and short-term resistance at USD1,726.95, the high from March 1.
Gold prices lost 3.45% last week as traders unwound long positions, or bets prices will rise, after Federal Reserve Chairman Ben Bernanke diminished expectations for more U.S. monetary easing last week.
However, the sharp decline triggered some bargain buying from traders reluctant to bet that prices would fall further.
While last week’s drop damaged the near-term technical outlook for the precious metal, many knowledgeable market analysts expect prices to recover in the long-term.
Wall Street bank Citigroup said in a report earlier that it sees gold prices surging towards USD2,400 an ounce by the end of 2012, with prices eventually hitting USD3,400 an ounce in “the coming years”.
However, the bank warned of price weakness in the short term and said there is a “real danger” that there may be a correction to USD1,600 an ounce.
Morgan Stanley, meanwhile said that, “Although immediate wider market pressures and near-term technical factors spell short-term weakness in gold, in the longer run it remains firmly underpinned by the U.S.' ultra loose monetary policy, portfolio diversification, and strong physical demand from Asia.”
"Negative real interest rates and accommodative monetary policy were and remain the key drivers of investment demand."
"Bernanke's testimony did nothing to remove this benefit," the investment bank said, while adding that it still sees a 75% the Fed embarks on a third round of quantitative easing.
Gold prices rallied in recent weeks, boosted by growing expectations for further monetary easing measures from global central banks.
Despite last week's pullback, the metal is still 9% higher this year after the Fed said in January it would keep U.S. interest rates near zero until at least 2014.
Meanwhile, concerns over Greece’s debt burden persisted ahead of the March 8 deadline for bondholders to join the agreement under which they will exchange their existing Greek government bonds for new paper in a swap deal.
A failure to agree on the swap would put the country back on the brink of a messy sovereign debt default.
Elsewhere on the Comex, silver for May delivery shed 0.2% to trade at USD34.45 a troy ounce, while copper for May delivery tumbled 1.3% to trade at USD3.853 a pound.
Copper prices came under selling pressure amid concerns over a slowdown in Chinese economic growth and its impact on the Asian nation’s copper demand.
In a speech to the National People’s Congress in Beijing earlier, Chinese Premier Wen Jiabao said the government will target an expansion of 7.5% this year and set an inflation target of 4%. The government had an 8% goal from 2005 to 2011.
China 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 April delivery traded at USD1,706.05 a troy ounce during U.S. morning trade, dipping 0.22%.
It earlier fell by as much as 0.98% to trade at a two-day low of USD1,695.55 a troy ounce.
Gold futures were likely to find support at USD1,689.95 a troy ounce, the low from February 29 and short-term resistance at USD1,726.95, the high from March 1.
Gold prices lost 3.45% last week as traders unwound long positions, or bets prices will rise, after Federal Reserve Chairman Ben Bernanke diminished expectations for more U.S. monetary easing last week.
However, the sharp decline triggered some bargain buying from traders reluctant to bet that prices would fall further.
While last week’s drop damaged the near-term technical outlook for the precious metal, many knowledgeable market analysts expect prices to recover in the long-term.
Wall Street bank Citigroup said in a report earlier that it sees gold prices surging towards USD2,400 an ounce by the end of 2012, with prices eventually hitting USD3,400 an ounce in “the coming years”.
However, the bank warned of price weakness in the short term and said there is a “real danger” that there may be a correction to USD1,600 an ounce.
Morgan Stanley, meanwhile said that, “Although immediate wider market pressures and near-term technical factors spell short-term weakness in gold, in the longer run it remains firmly underpinned by the U.S.' ultra loose monetary policy, portfolio diversification, and strong physical demand from Asia.”
"Negative real interest rates and accommodative monetary policy were and remain the key drivers of investment demand."
"Bernanke's testimony did nothing to remove this benefit," the investment bank said, while adding that it still sees a 75% the Fed embarks on a third round of quantitative easing.
Gold prices rallied in recent weeks, boosted by growing expectations for further monetary easing measures from global central banks.
Despite last week's pullback, the metal is still 9% higher this year after the Fed said in January it would keep U.S. interest rates near zero until at least 2014.
Meanwhile, concerns over Greece’s debt burden persisted ahead of the March 8 deadline for bondholders to join the agreement under which they will exchange their existing Greek government bonds for new paper in a swap deal.
A failure to agree on the swap would put the country back on the brink of a messy sovereign debt default.
Elsewhere on the Comex, silver for May delivery shed 0.2% to trade at USD34.45 a troy ounce, while copper for May delivery tumbled 1.3% to trade at USD3.853 a pound.
Copper prices came under selling pressure amid concerns over a slowdown in Chinese economic growth and its impact on the Asian nation’s copper demand.
In a speech to the National People’s Congress in Beijing earlier, Chinese Premier Wen Jiabao said the government will target an expansion of 7.5% this year and set an inflation target of 4%. The government had an 8% goal from 2005 to 2011.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.