Gold continued to climb in the most recent trading session together with the dollar, which edged up against a basket of currencies, as the euro declined against the greenback in cautious trade a day ahead of a European Central Bank policy meeting and Spain’s debt deals.
While the dollar may not see a significant correction soon, it is likely to continue gaining against the euro as the eurozone crisis persists. The adverse effects of a stronger dollar on gold are expected to be largely reduced in 2012, allowing the bullish macro drivers to influence price action, according to a research note from Societe Generale.
The probabilities of aggressive monetary easing from the world’s key central banks, including the European Central Bank, it is expected to keep sentiment for gold and silver bullish.
Gold inched up on Wednesday to dice with with a key resistance level, as ongoing uncertainties on the euro zone debt crisis drew investors to the safety of bullion.
Spot gold rose 0.3 percent to $1,636.89 an ounce by 0331 GMT, continuing the rise of more than 1 percent in the previous session. For the second straight session, spot gold broke above the 200-day moving average, a key support-turned-resistance level, suggesting that bullion may resume the uptrend that started in 2008. Technically, the prices are still in a consolidation period after the record high in September 2011, and this phase will likely end in end in the coming month. The uptrend will most likely prevail, but in the short term gold may to remain capped around the $1,700.
Silver for March delivery also rose, adding 0.2% to $29.86 an ounce.
Platinum group metals extended gains into a third straight day due to concerns on supply disruption in South Africa, as the national grid Eskom warned about extremely tight power supply in January. Spot platinum rose more than 1 percent to a four-week high of $1,478.25, before easing to $1,476.49. Spot rose 0.7 percent to $638.
Bright economic prospects offered by Alcoa’s most recent upbeat outlook helped push Asian shares higher, although market players hesitate from riskier bets before Italy and Spain put up bond auctions, seen as a test of investors’ confidence in the euro zone.
