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Gold futures edged higher during European morning trade on Monday, as investors considered the outlook for Federal Reserve policy while focus remained squarely on the U.S. economy.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,655.15 a troy ounce during European morning trade, up 0.4% on the day.
Prices rose by as much as 0.8% earlier in the session to hit a daily high of USD1,662.55 a troy ounce. Gold futures fell to USD1,626.05 a troy ounce on January 4, the lowest level since August 21.
Gold prices were likely to find support at USD1,626.05 a troy ounce, the low from January 4 and resistance at USD1,690.55, January 3’s high.
Gold futures tumbled to a four-month low in the previous session after the minutes from the Federal Reserve’s December meeting indicated that the central bank could end its bond-buying program earlier than expected.
According to the minutes, several Fed officials thought the central bank would be able to slow or stop its quantitative easing program well before December 2013.
Moves in the gold price over the past year have largely tracked shifting expectations as to whether the U.S. central bank would pump more money into the financial system.
On Friday, the U.S. Department of Labor said the economy added 155,000 jobs in December, easing from an increase of 161,000 in November. The unemployment rate held steady at 7.8%.
The Fed’s December minutes said monetary policy will remain accommodative “at least as long” as the jobless rate remains above 6.5%.
Meanwhile, focus remained on how U.S. lawmakers will deal with the upcoming debt ceiling debate.
U.S. lawmakers passed a last-minute bill to avoid the fiscal cliff last week, a series of looming tax increases and spending cuts that could have pushed the U.S. economy back into a recession.
But investors remained jittery over the longer term fiscal outlook, with negotiations on raising the U.S. debt ceiling still to come in February.
A stronger U.S. dollar limited any significant gains. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.2% to trade at 80.77.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Elsewhere on the Comex, silver for March delivery added 0.65% to trade at USD30.14 a troy ounce, while copper for March delivery shed 0.75% to trade at USD3.666 a pound.