Singapore: Gold steadied on Wednesday as bargain hunters resurfaced after a drop the previous day, while supply fears helped platinum stay near an all-time high.
Gold firmed to $965.10/965.90 an ounce from $963.20/964.00 late in New York on Tuesday, when it dropped nearly 2% after a reversal in oil prices sparked heavy selling from speculators.
Gold was below Monday’s record at $989.30 but analysts said the metal was still on track to hit $1,000 with oil hovering near an all-time high and the dollar’s appeal declining on expectations of more interest rate cuts in the United States.
“The outlook for gold is obviously subject to uncertainty,” said David Moore, analyst at Commonwealth Bank of Australia in Sydney, referring to Tuesday’s sharp drop to as low as $960.40.
“In my opinion, though, it is quite likely we’ll see $1,000 an ounce at a certain point in coming months. Probably, this morning, you just saw people taking advantage of the dip in prices last night.”
Oil briefly regained $100 a barrel on Wednesday after falling almost $3 a barrel the previous day, aided by expectations that OPEC would decide to hold output steady later in the day.
Firm oil prices lift gold’s appeal as a hedge against inflation.
Gold was previously fixed at a record high of $850 in January 1980 as high inflation linked to strong oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution sparked heavy buying from investors.
After adjusting for inflation, the 1980 high was $2,119.30 an ounce at 2007 prices, while the real average price in 1980 has been calculated at $1,532.14, according to precious metals consultancy GFMS Ltd.
“Gold will try the lower end first and then see whether it can hold. If not, it will try the major support of $950,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
“The upside seems to be capped at $970. We are expecting some correction,” said Leung.
Spot platinum rose to $2,221/2,228 an ounce from $2,220/2,230 an ounce, holding near Tuesday’s record high of $2,290 on persistent supply fears after a power crisis disrupted mining in main producer South Africa.
The most active platinum futures in Tokyo Commodity Exchange ended the morning session 60 yen per gram lower at 7,214 yen as speculators booked profits after pushing up the price by the daily 300 yen limit to 7,274 yen the previous day.
Spot palladium jumped to $552/557 an ounce from $545/550 an ounce, having reached a 6-1/2-year high of $590 on Tuesday.
Silver edged down to $19.60/19.65 an ounce from $19.71/19.76 an ounce, off Monday’s 27-year high at $20.60 an ounce.
Gold futures for April delivery on the COMEX division of the New York Mercantile Exchange fell $0.5 an ounce to $965.8 an ounce, off the record high of $992.00 hit Monday.