Gold futures gained Friday as better than expected U.S. consumer spending numbers combined with the controversial capping of the euro-zone rescue fund to send the greenback lower thus lifting dollar denominated commodities.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at $1,663.35 U.S. a troy ounce during U.S. morning trade, gaining 0.51%.
Gold futures were likely to find support at $1,627.75 U.S. a troy ounce, the low from March 22 and short-term resistance at $1,699.55 U.S., the high from March 27.
Gold tracked movements in the greenback Friday. Gold remains more sensitive to moves in the euro/dollar exchange rate in the short term than to rising risk aversion, which in the past has been a positive driver of prices.
Official data indicated U.S. consumer spending grew by 0.8% in February, beating the median estimate of 0.6% fuelling gold’s advance.
European leaders, meeting in Copenhagen, agreed to cap rescue funds at EUR500 billion after a German led coalition opposed further expansion of the debt firewall adding to the bullish gold sentiment.
The debt firewall was expected to be EUR800 billion, leading to speculation that the agreed amount falls short of the needed amount to stem the crisis.
Spanish Prime Minister Mariano Rajoy will announce the most austere budget since before the nation’s return to democracy in 1978.
Spain risks a deeper recession in an attempt to avoid suffering from the region's debt crisis
Helping gold climb, U.S. consumer purchases climbed 0.6% in February, after a 0.2% gain the previous month.
The news lessened safe haven demand for the relative safety of the U.S. dollar. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, gave back 0.17% to trade at 79.15
A weaker U.S. dollar usually lifts gold, as it increases the metal's appeal as an alternative asset and makes dollar-priced commodities less expensive for holders of other currencies..
Elsewhere on the Comex, silver for May delivery gained 1.13% to trade at $32.35 U.S. a troy ounce, while copper for May delivery added 0.66% to trade at $3.82 U.S. a pound.
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