Gold Pushes Higher, Ends Above $1,198

Vietnam Business » Vietnam Gold Market News » Gold Pushes Higher, Ends Above $1,198

Golds technical losses were viewed as therapeutic, shaking out players with weak long positions and dropping prices to levels where fresh demand could emerge after the precious metals June 21 rise to record highs, analysts said.

Gold prices recovered from early losses late Wednesday, rising from a 6-week low to above $1,200 an ounce, as equity markets rallied, the euro renewed its advance on the dollar and a corrective decline was seen to have run its course.

Spot gold was last around $1,203 an ounce late Wednesday, up from $1,191.50 late in the previous session. Earlier, the low slipped to $1,185.05 an ounce, a level last seen on May 25.

U.S. gold futures for August delivery finished $3.80 higher at $1,198.90 an ounce on the Comex metals division of the New York Mercantile Exchange. It, too, slid to a 6-1/2-month low in early trade, but later recovered.

"Looking at today, first of all that fact that gold was a bit oversold earlier and we are having a nice solid bounce in equities. I think thats also helping gold," said Peter Buchanan, senior economist at CIBC World Markets in Toronto.

"With daily momentum oscillators posting their first oversold readings since March, we look for renewed signs of basing ahead of resumption of the cyclical bull trend, which is still very much intact," Barclays Capital said in a note.

"Bulls need to regain the 21-day averages at 997/1,231 (in euro and dollar terms, respectively) to regain control."

Buchanan said the positive correlation between equity and gold markets had been resurrected and was supporting gold, adding that the euros renewed strength on the dollar also helped lift prices in late trade.

U.S. stock markets rallied on Wednesday, rebounding from recent losses, as a bullish earnings forecast for State Street fueled optimism about the upcoming earnings season.

The euro rose against the dollar in technical trading after breaking a resistance level that prompted some investors who had bet against the single currency to buy the euro back in effort to prevent losses.

Although the usual inverse link between gold and the dollar weakened earlier this year as both benefited from risk aversion, a stronger U.S. currency usually makes dollar-priced metals more expensive for holders of other currencies.

Golds refound strength was tentative at first, with concerns about the global economic outlook drawing some investors to the yellow metal as a safety play.

Because the safe-haven bet had been built into prices on their way to record highs, it had a lesser effect in Wednesdays rally.

"The general feeling is still of insecurity and, given the drop, people might see (gold) as a bargain, probably more on the speculative side than on the long-term investment side," said Wolfgang Wrzesniok-Rossbach, head of sales at Heraeus.

Gold had fallen some 6 % from its peak at $1,264.90 an ounce hit in late June.

In India, the worlds biggest gold consumer, jewelers bought stocks ahead of religious festivals, and other physical buyers in Asia snapped up bullion after prices fell.

China Mulled

Gold earlier slipped to a session low of $1,185.05, its weakest since late May, after Chinas State Administration of Foreign Exchange said gold will not become a major component of the central banks portfolio.

However, analysts said given the size of Chinas currency reserves, it was unsurprising gold would play only a relatively minor role in its portfolio, and that the news was unlikely to detract from central bank interest in gold if prices fell.

"China has $2 trillion in currency reserves, so it is simply not possible for them to invest a major part of this in gold-the gold isnt there," said Commerzbank analyst Daniel Briesemann.

In New York, holdings of the worlds largest gold-backed exchange-traded fund, New Yorks SPDR Gold Trust, dipped further on Tuesday to 1,316.481 tons.

The SPDRs holdings have fallen 3.955 tons from a record 1,320.436 tons at the end of June, against a rise of 18.429 tons in the same period of the previous month.

Spot silver had rallied to $18.02 an ounce the New York afternoon from $17.78 an ounce late in the previous session. It tied its fate to gold on Wednesday.

Platinum increased towards $1,521.50 an ounce from $1,512.50 an ounce late Tuesday, and palladium was last higher at $440.0 an ounce than $435.0 previously.

Vietnam Business And Financial News Network. Source [stox.vn]

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