Gold bounces in cautious trade, focus on Fed

Gold bounces in cautious trade, focus on Fed
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First Published: Mon, Jun 23 2008. 10 12 AM IST
Updated: Mon, Jun 23 2008. 10 12 AM IST
By Lewa Pardomuan / Reuters
Singapore: Gold bounced on 23 June as a weak US dollar spurred buying, but investors are likely to remain cautious ahead of the await the US Federal Reserve’s interest rates decision this week.
Gold rose to $905.25/906.25 an ounce from $901.35/902.75 late in New York on 20 June.
“From what happened in the past few days, I think it’s a bit of cautious trading. I think everyone is focusing on the FOMC meeting this week,” said Adrian Koh, analyst at Philip Futures in Singapore.
“I am looking at $905-$910 for a bit of resistance. If we do move above those levels tonight, we could see higher gold prices,” he said.
Gold jumped to its highest level in more than a week at $907.90 an ounce on 19 June on firm oil prices but had since corrected, and remains well below a record high of $1,030.80 hit in mid-March.
The euro inched up to $1.5624 on expectations the European Central Bank will raise interest rates by a quarter-percentage point to 4.25% in July.
The Federal Open Market Committee meets on 24 June and 25 June and is widely expected to leave interest rates at 2%, after slashing them by 3.25 percentage points since September.
Oil edged down after Saudi Arabia said it was ready to increase oil output capacity and Nigerian militants announced a unilateral ceasefire, with Middle East tensions putting a floor under the price.
“There’s a bit of short covering but it’s not great. I guess sentiment now is slightly neutral to bullish. $910 is the nearest resistance but it may be difficult to break for the time being,” said a bullion dealer in Hong Kong.
Gold futures for August delivery on the COMEX division of the New York Mercantile Exchange added $4.0 an ounce to $907.7.
In output news, Australia was set to record a sharper-than-expected 7% drop in gold production in the year to June as old mines closed and on below par output at some newer lodes across the outback.
Spot platinum fell to $2,053.50/2,073.50 an ounce from $2,048.50/2,068.50 late in New York. Spot palladium rose to $471.00/479.00 an ounce from $469.50/477.50 an ounce.
Silver edged up to $17.41/17.48 an ounce from $17.36/17.43 late in New York.
The most active Tokyo platinum contract for April 2009 delivery on the Tokyo Commodity Exchange ended the morning session 29 yen per gram lower at 6,989 yen.
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First Published: Mon, Jun 23 2008. 10 12 AM IST