Forexpros – Gold futures posted strong gains during U.S. afternoon hours Tuesday, hitting a two-week high as growing hopes of stimulus measures by world central banks boosted the appeal of the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,620.25 a troy ounce during U.S. afternoon trade, rallying 1.41%.
It earlier rose by as much as 1.45% to trade at USD1,620.35 a troy ounce, the highest since June 20.
Gold futures were likely to find support at USD1,551.35 a troy ounce, the low from June 29 and near-term resistance at USD1,622.95, the high from June 20.
Hopes for a fresh stimulus measures by the Federal Reserve were boosted after the U.S. Institute for Supply Management said Monday that its index of purchasing managers fell by 3.8 point to 49.7 in June from a reading of 53.5 in May, the first contraction since July 2009.
The data fuelled speculation that the Federal Reserve may implement a third round of quantitative easing, to shore up growth in the U.S. economy, which has been hit by the ongoing crisis in the euro zone.
Gold investors will be closely watching U.S. data in the second quarter for clues as to the likelihood of a fresh round of monetary easing, which could potentially hurt the dollar and support gold.
Investors were also eyeing the outcome of the European Central Bank’s policy meeting on Thursday, amid growing expectations for a rate cut to help bolster growth in the bloc.
Data on Monday showed that the unemployment rate in the region rose to a record in May, while the manufacturing sector remained firmly in contraction territory in June.
Meanwhile, the China Securities Journal, a state-run newspaper, said earlier that the time is ripe for China to cut banks’ reserve requirements as slowing inflation gives more room for easing to stabilize growth.
The report came a day after official data showed that Chinese manufacturing activity grew at its slowest pace in seven months in June, as new export orders tumbled to lows hit in March 2009.
Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
Trading volume in the U.S. will likely be light this week due to the Independence Day holiday. U.S. markets will be closed Wednesday.
Elsewhere on the Comex, silver for September delivery rallied 2.5% to trade at a two-week high of USD28.25 a troy ounce, while copper for September delivery jumped 2.15% to trade at USD3.543 a pound.
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