Gold futures rise to 8-week high as Greece, Bernanke testimony eyed

Forexpros - Gold prices were up for a third day on Thursday, climbing to an eight-week high amid concerns over the risk of a default by Greece, while markets awaited a testimony by Federal Reserve Chairman Ben Bernanke on the state of the U.S. economy.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,750.85 a troy ounce during early U.S. morning trade, gaining 0.4%.      

It earlier rose by as much as 0.7% to trade at USD1,756.15 a troy ounce, the highest since December 8.

Futures were likely to find short-term support at USD1,735.45 a troy ounce, Wednesday’s low and resistance at USD1,760.35, the high from December 8.

Meanwhile, euro-denominated gold futures rose to EUR1,333.20, only 3% away from the all-time high of EUR1,374.70.

Concerns over a possible Greek debt default escalated after Eurogroup head Jean-Claude Juncker said earlier that talks with private bondholders on a debt swap deal for Greece were “ultra-difficult”.

Earlier in the week, European officials indicated that negotiations with Greece’s private creditors were almost concluded.

An agreement is necessary for Greece to secure the next tranche of bailout funds in order to prevent a sovereign debt default, as the country does not have enough money to cover a EUR14.5 billion bond repayment due March 20.

Meanwhile, gold traders awaited Fed Chief Bernanke’s testimony before the House Budget Committee. Market participants will pay close attention to his comments on the U.S. economy and the need for further stimulus measures to boost growth.  

Gold futures have gained in six of the past seven trading sessions following the Fed’s pledge to push back the timing of a possible interest rate increase until late 2014. Gold's robust gains since the 2008 financial crisis have been fueled in part by low interest rates.

Knowledgeable industry participants continue to be bullish on the precious metal. Newcrest Mining, the world's third largest gold producer, expects gold to trade as high as USD2,500 an ounce and retain its safe haven status for as long as the world's financial system remains in crisis.

Meanwhile, Bank of America said in a report Wednesday that it expected gold prices to climb to USD2,000 an ounce by the fourth quarter of 2012, as the fundamentals for strong gold prices have not changed.    

Elsewhere on the Comex, silver for March delivery shed 0.3% to trade at USD33.71 a troy ounce, while copper for March delivery tumbled 1.1% to trade at USD3.799 a pound.