Gold prices perked up during Tuesday afternoon trading in Europe, building on the previous session's one percent increase and firmer oil prices, and traders said the market is likely to favour the upside.
Spot gold nudged up to $547.50/548.40 an ounce from $546.10/547.00 in late New York trade on Monday, assisted by strength in other precious metals and a softer dollar.
"At the moment, gold is following the general trend - silver and platinum are firm and have been leading the way," a trader said.
The dollar largely slipped on dollar-negative reports on the fourth quarter US current account deficit and February retail sales. Retail sales in February fell a steeper-than-expected 1.3 percent on the month but January's increase of 2.3 percent was revised up to 2.9 percent.
Gold has rallied smartly since late last week, when selling by investors and fund managers pushed gold down to $533.60, the lowest since early January.
Traders said sentiment was positive, amid the strong fundamentals of ongoing investment fund interest. Movements within a broad uptrend will be due to fund involvement ebbing and flowing.
"The overall direction is up, and any pullbacks will be seen as good buying opportunities," the trader said.
"It is in a wide range of $538.00 to $553.00, which can be drilled down to a narrower $542.00 to $550.00," he added.
Some traders said gold will continue to focus on economic releases, with US consumer price data due on Thursday.
Buoyant readings would strengthen expectations that the Federal Reserve might boost its funds rate to five percent or higher in the coming months to stamp out the threat of inflation, analysts said.
While gold historically attracted buying as an inflation hedge, a rising global interest rate environment was seen having a more negative impact on zero-yielding gold as investors might shunt money into other assets that offered bigger returns.
Oil was around $62 as forecasts for lower global oil demand offset concerns US gasoline supplies might be strained by the approach of the holiday season, which spurs fuel consumption.
Silver was at $10.18/10.21 an ounce from the previous day's $10.12/10.15, building on its steadier performance than gold in recent days.
"For the moment silver is set to remain extremely volatile as speculative players feature heavily on both sides of the spread," James Moore, analyst at TheBullionDesk.com, said in a daily note.
Platinum was at $1,020.00/1,024.00 an ounce versus $1,018/1,022 in New York, while palladium rose to $301.00/305.00 from $295/300.
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