Gold rises on Fed language, euro rally

Forexpros - Gold prices firmed on Friday as fresh hopes materialized that Greece and private-sector lenders were closer than ever to agreeing on debt-restructuring terms while sentiments grew that the U.S. monetary policies will remain ultra-loose, which weakened the greenback, gold's tradtional hedge.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,731.85 a troy ounce, up 0.30%.     

Gold futures were likely to test support at USD1,649.25 a troy ounce, Wednesday's low, and resistance at USD1,734.05, an earlier Friday high.

Talks between Greece and its private-sector creditors have broken down in the past over terms surrounding its debt restructuring.

However, hopes rose anew that a deal may be days away when European Union Monetary Commissioner Olli Rehn said an agreement was very close.
 
"The next three days will be very crucial for the future in three years," Rehn said Friday at a panel debate at the World Economic Forum in Davos, Switzerland, as reported by Bloomberg.

"We’re just about to close a deal on private sector involvement between the Greek government and the private-sector community. Preferably, still in January rather than February."

Furthermore, recent Federal Reserve language stating interest rates will likely stay low through 2014 sent the dollar falling against the yellow metal in recent sessions.

On Friday, lackluster U.S. gross domestic product data cemented expectations that the dollar will remain weak, which was bullish for gold.

Elsewhere on the Comex, silver for March delivery was down 0.19% and trading at USD33.680 a troy ounce, while copper for March delivery was down 0.65% and trading at USD3.876 a pound.