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Gold Holds Below 2-Week High

Gold Holds Below 2-Week HighGold Holds Below 2-Week High

Gold held below a two-week peak on Tuesday, its safe-haven appeal dulled with the dollar near a four-year high and growing signs of strength in the US economy.

The dollar held steady on Tuesday after European Central Bank officials raised the prospects of further stimulus and as investors waited to see if Japan’s leader would call a snap election after the country slipped into recession, Reuters reported.

A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies and also weakens its appeal as a hedge.

Spot gold was steady at $1,187.95 an ounce by 0730 GMT, just down from a two-week high of $1,193.95 hit in the previous session.

US economic data on Monday also hurt gold’s appeal as a hedge. While US manufacturing output rose only modestly, other data showed a rebound in factory activity in New York State.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.33 percent to 723.01 tons on Monday, the first increase since Nov. 3.

In a reflection of investor sentiment, however, holdings in the fund – which marks its tenth anniversary on Tuesday – were still near a six-year low. The ETF counts hedge fund Paulson & Co as its top investor.

Elsewhere, India’s central bank is in talks with the government to increase curbs on gold imports and an announcement could come as early as Tuesday, a finance ministry source said. More curbs could hit demand from India, the second biggest gold consumer, and add pressure on gold prices.

In top consumer China, local prices held steady at a premium of $2-$3 an ounce, as buying picked up on steadier prices. Sustained robust buying could support prices.

 

Financialtribune.com