Gold futures climbed up in the Asia electronic trades today as the euro firmed against the dollar, ahead of the last-ditch attempts by U.S. lawmakers to resolve a fiscal crisis seemed to be getting nowhere.
Gold is up around 6% for the year and is on track for a 12th straight year of gains on rock-bottom interest rates, concerns over the financial stability of the euro zone, and diversification into bullion by central banks.
The euro inched up 0.14% to 1.323 on Monday. An agreement on the U.S. budget would be viewed as positive for riskier currencies such as the euro and Australian dollar, while a deadlock is deemed positive for the safe-haven and highly liquid dollar.
February delivery gold futures are trading up $5 at $1661 an ounce on the Comex division of the New York Mercantile Exchange. On Friday, it shed 0.45% to settle the week at $1,656.45 a troy ounce. It may face a resistance near $1670 levels with support around $1635 levels.
On the week, gold futures dipped a modest 0.15%, as trading volumes remained light, with many investors already away on holidays.
Market players remained focused on developments surrounding the fiscal cliff in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1 unless Democrats and Republicans agree how to cut the deficit.
U.S. President Barack Obama met with congressional leaders at the White House Friday afternoon, but both sides failed to reach an agreement ahead of the looming year-end deadline.
The gathering included House Speaker John Boehner and Senate Minority Leader Mitch McConnell, both Republicans, as well as Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi, both Democrats. The House of Representatives is due to return to Washington on Sunday. The Senate will be in Sunday as well to try to reach a last-ditch agreement.
MCX February gold futures may open today’s session near Rs 30700 levels with resistance near Rs 30770 levels.
In the week ahead, investors will be eyeing Friday’s highly-anticipated data on U.S. nonfarm payrolls, as investors attempt to gauge the strength of the country’s economic recovery. Any improvement in the U.S. economy could scale back expectations for further easing from the Federal Reserve.
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