London: Gold declined on Wednesday as investors took profits from a six-week high, but the metal remained supported by good physical buying and firm oil prices.
Traders said fresh money from investment funds appeared to be flowing back into metals due to an improved technical picture following strong rallies in the past week, but the metal would struggle to move substantially higher in the near term.
“Sentiment is probably more positive than it was earlier but investors are still uncertain about direction. Prices have more upside potential but I don’t think there would be a rally past $690-695 in the near term without an additional catalyst,” said Suki Cooper, analyst at Barclays Capital.
“Physical demand looks quite strong. It certainly has cushioned prices but I don’t think it will drive prices substantially higher,” she said.
After solid gains this week, gold fell to $679.25-679.85 an ounce from a peak of $683.40 in New York on Tuesday, its highest level since July 24.
“Gold is inching slowly higher within its range ($639.10-694.60) which has dominated the market for the past five months. This maintains a fairly neutral to positive trading environment,” said Karen Jones, technical analyst at Commerzbank.
“The market has repeatedly failed this year at the $688-694 zone and does not appear ready to tackle this tough resistance.”
Investors eagerly await the US economic data. Non-farm payrolls are due on Friday, while Wednesday features weekly mortgage market figures, the ADP private sector employment numbers and the Federal Reserve’s Beige Book report on economic conditions. Reuters
Chikafumi Hodo in Tokyo and Lewa Pardomuan in Singapore contributed to the story.