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Gold bounces from two-week low, platinum off peak

Gold bounces from two-week low, platinum off peak
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First Published: Wed, Feb 06 2008. 10 43 AM IST
Updated: Wed, Feb 06 2008. 10 43 AM IST
Singapore: Gold bounced on Wednesday after a drop to its lowest in almost two weeks attracted bargain hunters, while platinum also rebounded, holding near an all-time high around $1,800 an ounce.
Spot gold rose to $889.75/890.75 an ounce from $886.85/887.55 late in New York. The metal hit a low of $885.30 on Tuesday on a firmer dollar and also after a slide in global shares forced some investors to sell gold to cover losses.
“Gold is still trading between $880 and $905. Just for today,” said William Kwan, a dealer at Phillip Futures in Singapore.
“Short-term market participants have decided to liquidate their gold holdings before the Chinese New Year. They prefer not to have any outright position over the long weekend,” said Kwan.
Gold rallied to a record high of $936.50 an ounce on 1 February amid worries about US economic growth before a rebounding dollar sparked heavy selling to as low as $904.70 on the same day. It had surged more than 30% in 2007 and has risen as much as 12% so far this year.
The physical sector in Asia saw purchases from retail investors and jewellers at lower levels, which helped gold defy pressure from weak stock markets and a firmer dollar.
Charts also showed the metal was in an overbought territory, with gold’s 14-day relative strength indicator (RSI) standing at 38.78 on Tuesday, down from 55.28 last Friday. The market views an RSI of 30 or less as oversold and 70 or more as overbought.
“Some consolidation will happen in the next two days. I would expect gold to be supported around $880 to $885,” said Louis Lok, a dealer at Bank of China in Hong Kong.
“This morning, we saw a little bit of buying interest in Hong Kong.”
Japanese stocks dropped more than 4% on Wednesday after the Dow Jones Industrial Average fell 2.9%, its biggest drop in nearly a year, amid growing fears of a US recession.
The euro edged down to $1.4635, pulling further away from its record high of $1.4968 reached in November.
“Overall, the sentiment for precious metals is still bullish,” said Kwan of Phillip Futures.
“People are still looking for an opportunity to invest in gold. That is why whenever you see any dips in gold, you can expect firm support and buying interest coming back from gold investors who have been staying on the sidelines.”
Platinum rose to $1,777/1,782 from $1,770/1,775 late in New York. It roared to a record high of $1,809 on Tuesday on supply concerns in South Africa before heavy profit-taking kicked in.
South Africa’s government appealed to mining firms for help in cutting power consumption on Tuesday to ease a power crisis caused by the failure of electricity generation to match economic growth. ]
The benchmark December platinum futures contract on the Tokyo Commodity Exchange added 56 yen per gram to 5,815 yen but was off Tuesday’s record high of 5,938 yen.
Palladium rose to $413.00/418.00 an ounce from $411.00/415.00 an ounce but was off Tuesday’s six-year high of $427 an ounce.
COMEX’s April gold futures rose $3.9 an ounce to $894.2 an ounce.
Silver edged up to $16.39/16.44 an ounce from $16.32/16.37 in New York.
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First Published: Wed, Feb 06 2008. 10 43 AM IST
More Topics: Markets | Precious | Gold | Platinum | Money Matters |