BackGold continues to hover near $1,000, analysts differ on cause
Gold continues to hover near $1,000, analysts differ on cause
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London: Gold held broadly steady on Monday just shy of $995 (Rs48,556) per ounce, consolidating stellar gains last week that took it tantalizingly close to the $1,000 psychological level, with buyers encouraged by dollar weakness.
Investment in palladium continued to jump—sending prices close to highs for the year—with fund holdings swelling on expectations for depressed auto demand to pick up.
Spot gold stood at $994.70 per ounce by 13.48 GMT, broadly steady from $993.40 quoted late in New York last Friday.
The price rose as far as $997.20 last week—its highest since February, when it briefly topped $1,000.
While the gold price found support at lower levels, trading ranges were narrow and volumes were said to be thinner, with investors restraining themselves due to a US public holiday.
A confluence of dollar weakness—making the metal more attractive to non-US investors—and doubt about the sustainability of global economic recovery prompted a spate of investors to seek refuge in gold last week, as prices hit six-month highs.
“It (higher gold price) certainly reflects some uncertainty and, along with that the short-term factors such as the US dollar," Daniel Wills, senior analyst with ETF Securities Ltd told Reuters Television.
“It also seems to reflect ongoing uncertainty in terms of the likely impact from all the quantitative easing out there, in terms of how that flows through from money supply and into inflation," he added.
While some analysts have argued the case for buying gold as a hedge against the potential inflation when central banks try to navigate away from quantitative easing, others are less convinced.
“I don’t buy the argument about inflation concerns, it seems to be far too far-fetched at the moment when we’re still looking at a deflationary environment," said David Wilson, director of metals research at Société Générale in London.
Miho Yoshikawa in Tokyo and Jane Grieve in London contributed to this story.
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