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Gold slips, Mideast violence supports

Gold slips, Mideast violence supports
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First Published: Tue, Dec 30 2008. 03 33 PM IST
Updated: Tue, Dec 30 2008. 03 33 PM IST
Singapore: Gold slipped on Tuesday as speculators booked profits from a rally to an 11-week high the previous day, but sentiment was still underpinned by conflict in the Middle East and a weaker US dollar.
It rallied as much as 24% in 2008, striking a record high of $1,030.80 in March on fears of rising energy costs and as investors diversified into precious metals on the dollar’s uncertain outlook.
“There’s a reasonable chance we’ll see some end-year profit taking in what has been the best performing commodity this year and certainly this quarter,” said Mark Pervan, head of Australia & New Zealand Bank research.
“There’s been concerns of high political risk in the market. But I think it might struggle to get through $900, unless there’s a major flare up again Tuesday night,” he said, referring to the fighting between Israel and Hamas in Gaza.
Gold was trading at $873.75 an ounce, down $3.75 an ounce from New York’s notional close on Monday, when it rallied to as high as $889.55 an ounce after oil jumped more than $2 on fears that Israeli attacks on Hamas could disrupt oil supplies.
Buying from Japanese investors amid fears of a global recession helped gold stay at current levels, dealers said. It was last traded above $900 in early October, before tumbling to its weakest in 13 months around $680 after a sell-off in equities and fears of a deepening global economic downturn forced investors to cash in to cover losses.
It slowly regained its safe-haven appeal after stock markets stabilised, with a rebound to around $800 also igniting technical buying.
Oil fell below $40 on Tuesday as demand concerns overshadowed Middle East crude supply fears amid the Israeli-Hamas conflict, with prices on track to end the year down 60%, their biggest annual loss on record.
“Although gold has the energy to head higher, sustainability would be a key factor,” said Pradeep Unni at Richcom Global Services in Dubai, adding that gold had in the past failed to hold on to gains driven by geopolitical tensions.
He pegged resistance around $930 an ounce, a near three-month high hit in early October.
Investors are awaiting the release of US consumer confidence for December, due at 1500 GMT. Economists polled by Reuters expect a reading of 45.0 compared with 44.9 in November.
Platinum was trading at $902.00 an ounce, down $13.50 from New York notional close.
New York gold futures added $0.7 an ounce to $876.0 in electronic trade.
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First Published: Tue, Dec 30 2008. 03 33 PM IST
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