Gold regains strength but struggles below $1,200

Gold regains strength but struggles below $1,200
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First Published: Fri, Jul 09 2010. 11 07 AM IST
Updated: Fri, Jul 09 2010. 11 07 AM IST
Singapore: Gold edged up to near $1,200 an ounce on Friday as bargain buying helped offset selling from speculators, who had shifted some of their money to equities on hopes of an economic recovery.
Dealers saw purchases from jewellers and other physical buyers across Asia, keeping premiums for gold bars steady. The electronics sector in Japan was on the sidelines, but bargain hunters snapped up platinum.
Asian stocks rallied for a second day, with the Nikkei poised for its best week in about four months as risk appetite got a boost from a fall in US jobless claims and an upbeat view on Europe’s economy from the European Central Bank.
Spot gold added $1.12 to $1,197.60 an ounce by 11:03am, well below a lifetime high above $1,264 struck in late June on worries that the debt crisis in Europe could spread and the US economy was slowing.
“We see a lot of people buying gold on dips, below $1,200. However, what we see in these past few days is a bit of indecision in the market,” said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
“In the long run, I don’t think that the economic recovery is still entrenched yet. People are still waiting for more signs that the economic recovery is really on track.”
US gold futures for August delivery rose $2.2 to $1,198.3 an ounce, having hit an intraday low around $1,187 on Thursday as investors dumped bullion to buy riskier assets.
With spot gold down nearly 1 pct this week, and still hovering below its 50-day moving average, some consumers might wait for more declines.
“It’s still a heavily bought market so it’s going to be vulnerable to profit taking,” said Mark Pervan, senior commodities analyst at ANZ in Melbourne.
“I think $1,170 is still safe to be the next key support level. If it breaks through $1,170, then you are probably going to move down to $1,130 pretty quickly,” said Pervan, referring to levels seen in May and April.
Lower prices attracted steady purchases from jewellers in Thailand and Indonesia as well as buying from bargain hunters in Hong Kong.
“The physical demand is still very high. My orders go to up to next Friday at premiums of 80 cents,” said a dealer in Singapore, who was busy selling gold bars to top consumer India.
The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings slipped to 1,316.036 tonnes by July 8 from 1,316.481 on 6 July. The holdings hit a record at 1,320.436 tonnes on 29 June.
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First Published: Fri, Jul 09 2010. 11 07 AM IST
More Topics: Markets | Precious | Gold | Commodity | Bullion |