Gold futures top USD1,750 in wake of Greece bailout deal

Forexpros - Gold futures added to gains on Tuesday, climbing to an eight-day high amid uncertainty over Greece’s ability to overcome its debt crisis despite the announcement of a new bailout package.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,750.95 a troy ounce during U.S. morning trade, rallying 1.45%.      

It earlier rose by as much as 1.5% to trade at USD1,751.15 a troy ounce, the highest since February 9.

Futures were likely to find support at USD1,727.85 a troy ounce, the low from February 17 and short-term resistance at USD1,754.95, February 9’s high.

There was neither floor trading nor a closing price on the Comex Monday because of the U.S. Presidents’ Day holiday. Tuesday’s trades will be booked with yesterday’s electronic transactions for settlement.

Euro zone finance ministers agreed the details of a new financial package for Greece, which will reduce the country’s debt to 120.5% of gross domestic product by 2020.

Private-sector creditors also agreed to take a write-down on their bonds of more than 53%, which is expected to cut Greece's debt by EUR107 billion.

But investors remained wary amid concerns that a general election in Greece, which is expected to take place in April, could result in problems implementing the terms of the package.

Some market participants felt the deal was only a short-term fix that falls short of what Greece needs to prevent financial collapse.

A report on the sustainability of Greece’s debt by the Troika, which is composed of the European Union, European Central Bank and the International Monetary Fund, said that "additional debt relief" will be required in the future.

Gold prices have moved in a range between USD1,700 and USD1,760 since the beginning of February, closely tracking sentiment towards Greece’s bailout talks.

Meanwhile, the international tensions over Iran's nuclear program and the subsequent rise in oil prices to nine-month highs are also supporting gold prices.

Iran deployed warplanes and missiles Monday in an "exercise" to protect nuclear sites threatened by possible Israeli attacks, state-run media outlets reported.

There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.

Higher oil prices tend to benefit gold as it enhances its appeal as a hedge against oil-led inflation.

Elsewhere on the Comex, silver for March delivery rallied 2% to trade at USD33.88 a troy ounce, while copper for March delivery surged 2.55% to trade at USD3.803 a pound.

India's silver imports may top 5,000 metric tons in 2012 due to strong investment demand, Prithviraj Kothari, the president of the Bombay Bullion Association, said Tuesday.

The country imported around 4,800 tons of silver last year, he said.