×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Gold climbs towards $1,120/oz as dollar slips

Gold climbs towards $1,120/oz as dollar slips
Comment E-mail Print Share
First Published: Fri, Mar 12 2010. 04 46 PM IST
Updated: Fri, Mar 12 2010. 04 46 PM IST
London: Gold rose towards $1,120 an ounce in Europe on Friday as the dollar hit a three-week low against the euro, helping the metal recover from the lows it hit in the previous session.
Traders are awaiting fresh direction from US retail sales data for February, a key measure of consumer optimism in the world’s largest economy. This is likely to affect the dollar, and consequently gold.
Spot gold was bid at $1,118.00 an ounce at 4:12pm, against $1,109.30 late in New York on Thursday. US gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose $9.80 to $1,118.00 an ounce.
“Today’s firmer tone has largely been driven by the stronger euro and weaker dollar, and we are clustered around an area of reasonably decent support levels on the chart,” said RBS Global Banking & Markets analyst Daniel Major.
From a technical perspective, gold has key support at $1,115 and $1,104, analysts said, as well as the psychologically important $1,100 level at which it bounced on Thursday.
However, the technical picture overall remains neutral, they added. “Only a close back above $1,131 would inspire renewed calls for higher prices,” said ScotiaMocatta in a note.
The euro rose to a three-week high versus the dollar on Friday as the US currency came under mild selling pressure ahead of US retail sales numbers due at 7:00pm.
Weakness in the US unit boosts gold’s appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Economists surveyed by Reuters expect a 0.2% decline in sales compared with a 0.5% increase in January. European shares rose ahead of the data.
Oil rose towards $83 a barrel on Friday, poised for a second consecutive weekly increase, amid expectations that energy demand will continue to grow despite any efforts by China to tighten monetary policy further on rising inflation.
Gold tends to track crude prices, as the metal can be bought as a hedge against oil-led inflation.
Demand for the exchange-traded funds backed by the precious metal was soft, with holdings of the world’s largest gold ETF, New York’s SPDR Gold Trust, unchanged on Thursday from a day before.
However, investment in US gold futures remains firm, analysts said. “There is a reported build-up of long positions in New York futures,” said Fairfax analyst John Meyer in a note.
Among other precious metals, silver was bid at $17.29 an ounce against $17.16, tracking gains in gold.
The world’s largest silver-backed ETF, the iShares Silver Trust, said its holdings fell 48.82 tonnes from the previous day to 9,302.58 tonnes on Thursday.
Elsewhere platinum hit a seven-week high $1,623.50 an ounce and was later bid at $1,621.50 against $1,609.50, while palladium was at $461.50 against $458.
The metals have performed well this year as investors expected industrial demand from carmakers to improve and investment buying to rise. They are also closely eyeing supply of the metals.
“With a share of 79% in global production, South Africa is the largest producer of platinum and, accounting for 35 percent of global palladium production, the country ranks second worldwide,” said Commerzbank in a note.
“Should there be shortages in power supply on the back of the World Cup in June, production of platinum group metals will be vulnerable to shortfalls.”
Comment E-mail Print Share
First Published: Fri, Mar 12 2010. 04 46 PM IST
More Topics: Markets | Gold | Stocks | Dollar | Rupee |