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Gold edges down in Europe as risk appetite recovers

Gold edges down in Europe as risk appetite recovers
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First Published: Fri, May 01 2009. 09 45 PM IST
Updated: Fri, May 01 2009. 09 45 PM IST
London: Gold edged lower in Europe on Friday as a recovery in risk appetite, reflected in the firmer tone to stock markets, dented the metal’s safe haven appeal, with traders awaiting US data due later for direction.
Trading is thin due to May Day holidays across Europe and Asia, traders said.
Spot gold was bid at $882.70 (Rs44,452) an ounce at 1142 GMT, against $885.50 an ounce late in New York on Thursday.
“Another good day for Asian equity markets kept gold under pressure this morning in pretty thin trade, with support around $880 tested,” said Tom Kendall, precious metals strategist at Mitsubishi Corp. “So far that level has held but gold seems likely to face further selling once US markets open,” he added. “If we break lower, then the metal could rapidly head towards $855.”
The MSCI world index and European stocks were little changed on Friday, but the equity markets’ good performance in Asia, where Japanese equities hit a four-month high, reflected hopes the global economic downturn is bottoming out. US stock futures also pointed to a higher opening on Wall Street.
“As stock markets extend their gains, funds are likely to get further diverted away from bullion into equities,” said Pradeep Unni, senior analyst at Richcomm Global Services.
“Technically, charts look quite weak and selling momentum (should) gather pace as gold pierces through the $880 -$878 support,” he said. Bargain hunting might limit the slide below $864, he added.
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First Published: Fri, May 01 2009. 09 45 PM IST