Gold climbed in Asia on Tuesday afternoon as it looked set to puncture a key resistance of $416 an ounce this week, after a Group of Seven (G7) meeting failed to come up with any agreement to stem the dollar's fall.
"The fortunes of gold are still firmly tied to those of the US dollar with any renewed weakness in the greenback likely to push gold higher," N M Rothschild said in a report.
Spot gold was traded at $407.50/408.25 an ounce compared with $406.25/407.00 last quoted in New York and London's on Monday afternoon fix of $405.95.
The dollar was at 105.57 yen against late New York levels around 105.70 yen and the euro was at $1.2739 versus $1.2692.
Gold, used as jewellery in Asia, has closely followed movements of the dollar against other currencies, touching a 15-year peak at $430.50 an ounce on January 6 when the dollar fell to a lifetime low against the euro.
"We had a good decline from around $431 to $394. So I think for the time being, the bearish sentiment should be over," said one precious metals analyst in Sydney.
"At the moment, we are on our way to $416 but we need a pullback to $401 first.
Today's upside will be $409," said the analyst who pegged key support at $401 and $394 an ounce.
Tokyo gold futures gained despite a steadier yen as local dealers took cue from a rebound in New York.
Comex gold futures closed on a more secure footing above $400 an ounce on Monday boosted by views in the market that a struggling dollar should continue to support the precious metal.
The recent slump in the greenback has made dollar-denominated gold more affordable for holders of other currencies.
The benchmark December 2004 gold contract on the Tokyo gold futures rose eight yen per gram to 1,384 yen. Palladium was quoted at $236/241 an ounce, silver at $6.42/6.44 and platinum at $836/841.
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