The increase in the price of gold futures continued for a second day in three sessions in line with the weakening U.S. dollar thereby triggering an increase in demand for gold as an alternative asset.
Gold futures contract for February delivery rose 1.3 percent to 1617.60 U.S. dollars per troy ounce (equivalent to 31.1 grams) at 1:36 PM, Tuesday (20/12/2011) local time, on the Comex, the New York. “We moved onto a better euro bid after the headlines that internationally Monetary Fund (IMF) will provide more funding to save Europe,” said Bert Melek, an analyst with TD Securities in Toronto on Tuesday.
The weakening U.S. dollar because the euro is stronger after the 17 eurozone member countries agreed to increase the bailout of 150 billion euros to the IMF.
In addition, gold is also influenced by the conditions of the European Central Bank to increase its support for the bond market. Gold also rose because the level of business confidence rises German businessman in unexpectedly for a second month in December. As a result, the euro also rose 1 percent against the U.S. dollar.
According to Bloomberg data, 30-day correlation coefficient between gold and the euro stood at 0.59. Greater than October 7 to 0.35. A figure far from the number 1 indicates they tend to move opposite, while close to one means that both move together.
The Shandan, senior trader Cinda Futures Co., said the gold price below U.S. $ 1600 will remain attractive for investors who still believe in the long term trend. “The dollar will remain a key controller for the short-term rates,” said Shandan.