Gold rises for 4th day, eyes technical resistance
NEW YORK (Reuters) - Gold rose for a fourth straight session on Wednesday on safe-haven bids due to uncertainties in Europe ahead of a key election in Greece, but the metal's repeated failures to break above major chart resistance could trigger technical selling.
Bullion raced toward $1,625 an ounce earlier in the session after weak U.S. retail sales and wholesale prices data raised the prospect of additional monetary easing from the Federal Reserve. [ID:nL1E8HD250] Concerns about Spanish and Italian debt and jitters over Sunday's Greek election also kept gold prices supported.
The metal, which has largely moved in sync with risky assets so far this year, later pared gains even though the euro stayed higher. Gold has also repeatedly failed to break above $1,640 for over a month despite several recent rallies.
"Right now there seems to be a disconnect with gold and the euro, and my fear is that if we don't get above $1,640, we can have from a $50 to $70 selloff in the coming days," said Anthony Neglia, president of Tower Trading and a COMEX gold options floor trader.
Spot gold was up 0.5 percent at $1,617.70 an ounce by 2:39 p.m. EDT (1839 GMT), having earlier hit a high of $1,624.36.
After briefly falling to $1,580 an ounce, the metal has gained 4 percent in the last four sessions on better physical demand and fund buying in call options, as signs of a worsening European crisis fueled speculation of more monetary easing by central banks.
On the charts, gold's technical outlook brightened after the metal broke above its 50-day average after its four-day rise. However, traders said bullion must breach last week's high of $1,640 an ounce to extend its rally.
U.S. COMEX gold futures for August delivery settled up $5.60 at $1,619.40 an ounce, with trading volume about 40 percent below its 30-day average, preliminary Reuters data showed.
FED MEETING IN FOCUS
Gold's investment-hedge appeal also improved after a $125 million European bailout on debt-stricken Spanish banks earlier this week should provide markets with additional liquidity.
In addition, some investors have been accumulating bullion ahead of a policy meeting by the Federal Reserve next week. Any possible mention of a new stimulus program in the Fed's policy statement will likely send gold prices rallying.
The metal had rallied as much as 15 percent after the Fed in January said it would keep rates near zero until at least late 2014, but gold has since tumbled several times after Fed Chairman Ben Bernanke did not mention further easing in his Congressional testimonies.
Year to date, gold is up about 3 percent.
SocGen analyst Robin Bhar said that markets were speculating that Bernanke may warm toward a third round of asset-buyback program known as quantitative easing, and that will be enough to put a floor under the gold price.
Among other precious metals, silver slipped 0.1 percent to $28.91 an ounce. Spot platinum gained 1 percent to $1,461.08 an ounce, while palladium eased 0.6 percent to $616.72 an ounce.
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