Gold ended up in late day trading yesterday, with investors continuing to seek a safe haven in the precious metal amid weakness in U.S. and global equity markets. As renewed concerns over the eurozone debt problems resurfaced with yields soaring in bond auctions in Italy and Spain. Investors started to worry if the newly approved EU firewall was large enough to cover the mounting debts.
Gold gained $16.80 or 1.0 percent to close at $1,660.70 an ounce on the Comex division of the New York Mercantile Exchange. Gold traded at an intraday high of $1,659.50 an ounce and a low of $1,632.50 an ounce. Tuesday, gold extended gains for a second session after some disappointing U.S. jobs data last week and rising inflation in China.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.82 on Tuesday, up from 79.79 in US trading late Monday. The dollar scaled a high of 80.02 intraday, with a low of 79.60. The euro was trading lower against the dollar at $1.3100, as compared to $1.3106. The euro had climbed to a high of $1.3144 intraday with a low of $1.3056.
There were increased concerns over the eurozone debt crisis with yields on government bonds in Italy and Span growing. The 10-year Italian bonds rose 31 basis points to 5.67%, the highest since mid February. Meanwhile, yields on government bonds in Spain rose to its highest since end November, increasing 19 basis points to 5.93 percent, just short of the closely-watched 6 percent. In economic news, the U.S., Commerce Department’s figures put the level of inventories for wholesalers at a seasonally adjusted level of $478.9 billion in February, reflecting a 0.9 percent increase from January levels.
Most economists had expected a more modest 0.6 percent increase in inventories. Furthermore, January figures, which had initially shown a 0.4 percent increase in inventories, were upwardly revised to show 0.6 percent growth. Platts released their forecast for crude inventories showing a continued climb, helping to push down the price of crude to 100.00 From the eurozone, Germany’s merchandise trade surplus increased more than economists expected in February, data released by the Federal Statistical Office showed.
The trade surplus increased to euro 14.7 billion in February from euro 11.9 billion a year earlier. Economists were looking for a trade surplus of euro 12 billion. On a seasonally adjusted basis, the trade balance was a surplus of euro 13.6 billion. And in Japan, the BoJ announced they will continue to hold interest rates at current levels.